The R3 project is likely to be a significant milestone in the history for blockchain technology.
On Tuesday, in a significant development, twenty two of the world’s biggest banks have come together to collaborate on developing an international payments system that would allow existing central bank currencies and any new digital ones to be transacted via the blockchain, said R3, a fintech, in a statement.
“Natixis believes in the potential of distributed ledger technology for cross-border payments and is exploring several initiatives in that space,” said Frederic Dalibard, head of Digital for Corporate & Investment Banking at Natixis, one of the banks involved in the project.
The other banks that collaborated in the project, whose prototype will be released by the end of this year, include Commerzbank, HBSC and Barclays.
While there have been multiple efforts to develop a cross-border blockchain-based payment system including the one that was led by UBS to create a “utility settlement coin” that would represent each major currency, the R3 project stands out because its core system architecture runs on R3’s “Corda” platform which can be adapted to central bank-issued digital currencies as and when they appear.
While many central banks, including the European Central Bank, the Bank of Japan and U.S. Federal Reserve, have delved into issuing digital currencies their common refrain was that the blockchain technology is not mature enough to power the world’s biggest payment system.
However, many continue to believe in its promise.
In a research note for this month, UBS Wealth Management stated, blockchain could add as much as $400 billion to the annual global economic value by 2027, and that investing in the technology could be equated to investing in the internet in the mid-nineties.