A group of seven banks including Santander, CIBC and UniCredit announced a major technological breakthrough. They are among the first financial institutions in the world to move real money internationally using technology based on blockchain system.
The blockchain is a database of identical copies distributed across different computers and controlled by different parties, the parties involved in those transactions, without a body to serve as a central authority. Kind of virtual records book, the technology behind the bitcoin virtual currency.
Last month, the banks announced that they took part in making international payments projects using digital assets on the platform of Ripple, San Francisco firm that works with digital compensation transactions.
Instead of performing transactions through accounts in local currency in correspondent banks around the globe, banks convert funds to Ripple currency, known as XRP, and then complete the transaction almost automatically. To date, the compensation process was slow -demorando three to five days, in many cases- and subject and errors.
The seven banks that have signed represent "a major milestone, perhaps a turning point," said Chris Larsen, CEO and co-founder of Ripple.
The blockchain system-based technology has captured the imagination of the financial services sector in the last two years, with several companies looking for ways to use it to reduce costs and reformulate their daily operations.
The Supervisory Board of Financial Stability, which brings together various regulatory authorities in the US, said in its annual review that systems like the Ripple can reduce the cost of transactions and increase the efficiency of financial intermediation.
However, the council added that these systems "present certain risks and uncertainties." The warning came after the DAO, an autonomous decentralized organization that uses blockchain of ethereum virtual currency, was attacked by hackers who stole about $ 60 million.
The group of banks that use the Ripple also includes UBS, German Reisebank, the National Bank of Abu Dhabi and ATB Financial, Canada. Tim Wan, innovation director of ATB in Calgary, said his bank had begun to use the platform to process small payments for a maximum of a few thousand dollars, but he wanted to experiment with compensation in greater volume, operating by "lots" -and that he intended to use it to enter into new business areas, such as providing large-scale liquidity to the foreign exchange markets.
"In the end, what technology has to offer is that it is a great democratizing," said Wan.
"You do not trust the institution, but in the transaction. If the funds exist, the transaction will take place."
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