R3 CEV plans to launch an open-source blockchain within a year, according to Tim Swanson, the firm's research head. The London-based development team is building a generic ledger that member banks wan
R3 CEV plans to launch an open-source blockchain within a year, according to Tim Swanson, the firm's research head. The London-based development team is building a generic ledger that member banks want to test for trade financing, syndicated loans, OTC derivatives settlement, and marketplace lending.
"Many banks feel they can reduce, or eliminate altogether, various costs, by adopting some sort of common shared ledger and let that proliferate through the industry," Swanson told the Sydney Morning Herald.
R3, a New York fintech firm anchoring a banking consortium of more than 30 major institutions—among them BNP Paribas, Deutsche Bank, JP Morgan, Barclays, and the Royal Bank of Scotland—has not yet determined whether participation will remain limited to member banks. The company is weighing whether to bring in external partners.
But the blockchain needs regulatory approval before banks can use it. Swanson said the team designed the system with regulators' needs in mind from the start, aiming to give them real-time visibility into financial activity.
"If we do our job right, what this tech can do is allow regulators to have a window into real-time data, which they can read and react to and create policy towards. If regulators have a window into what is going on, they can get a better idea of preventing systemic risks," Swanson said.
R3 is exploring that exact use case—deploying blockchain to monitor global markets for systemic risk. Charley Cooper, R3's managing director, told Bloomberg BNA that the company discussed this with regulators, noting that "there has been a significant appetite for some sort of ledger structure that would allow regulators to have a view into the world of finance."
Cooper said the effort remains in early phases. "We haven't designed exactly what that might look like, but it's definitely something that's factored into our thinking and it's something that is driving a number of different regulatory conversations we've been having globally."
Swanson said most regulators he has spoken with remained optimistic but wanted to take a conservative approach to ensure delivery.
The Commonwealth Bank of Australia announced a working blockchain. This week, CBA and the Coalition of Automated Legal Applications (COALA) are hosting the Sydney Blockchain Workshops, bringing together regulators, policymakers and technologists to discuss blockchain's possibilities and challenges.
