Japanese Megabanks To Test Blockchain in Cross-Border Trials 

Key Takeaways

• Three Japanese megabanks will begin trials using blockchain technology to make instant international payments.
• Blockchain technology will be incorporated on top of the standardized SWIFT system, completing transactions in less than a second. 
• The move marks the latest in a number of trials being launched by traditional finance institutions.

Japan’s three megabanks are developing a framework for instant international payments using blockchain technology on top of existing payment infrastructure, according to a report by Nikkei. 

The move marks the latest in an increasing number of trials being launched by traditional finance institutions looking to take advantage of blockchain technology. 

Japan’s Megabanks to Incorporate Blockchain Into SWIFT

Three megabanks in Japan, Mitsubishi UFJ Financial Group, Mizuho Financial Group, and Sumitomo Mitsui Financial Group, will start blockchain-powered trials as early as Autumn.

Nikkei reported  that while the initial use will be between companies, consumer usage is possible in the future. 

International payments currently go through the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system. 

SWIFT is a standardized and secure messaging network that enables financial institutions to send and receive information about financial transactions.

When money is being sent internationally, the bank uses the SWIFT network to communicate payment instructions to the recipient’s bank. Each bank involved in the transaction is identified by a unique SWIFT/BIC code, which ensures that the payment is directed correctly.

However, this system can sometimes take anywhere from an hour to a month if the transaction is low on key information. 

The new system trial will use stablecoins on the blockchain that are tied to the value of different currencies and sent directly through the SWIFT system. 

This will allow transactions to be completed in less than a second and banks will not have to invest in any new systems or procedures. 

Siemens Launches Second Blockchain-Bond

In September, German industrial giant Siemens issued its second-ever digital bond as part of the European Central Bank’s initiative to expand the usage of private blockchains for securities settlement.  

The €300 million ($332 million)  digital bond, settled on a private blockchain called SWIAT, was verified much quicker than the company’s previous transaction, settled on the Polygon blockchain. 

“Automated processing within a few minutes shows the enormous potential of this new technology and confirms our strategy of playing a leading role in continuously shaping the digital transformation,” Peter Rathgeb, corporate treasurer of Siemens AG, said. 

“We are proud to be an active driver of further developments in this area and of the further digitalization of the capital markets,” he added. 

Russia and China Turning to Crypto?

As Western sanctions against Russia continue to intensify, the country has increasingly turned to crypto and blockchain technology as a means of circumventing restrictions. 

Russia has explored using crypto like Bitcoin (BTC) to facilitate international trade, especially with countries that are also facing sanctions or are willing to bypass Western financial systems. 

As CCN previously reported, Russia is considering permanently using stablecoins for cross-border settlements to bypass Western sanctions. 

Alexander Murychev, executive vice president of the Russian Union of Industrialists and Entrepreneurs, previously described stablecoins as “very promising” for cross-border financial transactions. 

Engaging these backed assets will introduce a greater volume of liquidity into the market and help establish a long-term resource, he added. 

About the Author

Kurt Robson

Kurt Robson is a London-based reporter at CCN with a diverse background across several prominent news outlets. Having transitioned into the world of technology journalism several years ago, Kurt has developed a keen fascination with all things AI. Kurt’s reporting blends a passion for innovation with a commitment to delivering insightful, accurate and engaging stories on the cutting edge of technology.

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