South African Reserve Bank has declared a blockchain based interbank clearance and settlement system that was under trial a success.
The trial which has been running for four weeks involved Discovery Bank, Investec, Nedbank, Standard Bank among other banks.
The central bank says the system processed 70,000 transactions, the daily average volume of all transactions the country’s clearance system handles, in two hours.
The system is based on JP Morgan’s enterprise open source blockchain platform Quorum. The project called “Khokha” or “pay” in isiZulu will undergo further evaluation on its compatibility with other systems that integrate with RTGS.
Project Khokha is seen as an initiative in collaborating for innovation, therefore, both the process, as well as the outcome of the project, contribute to the SARB’s goals. The decision was made to assess the use case for DLT in wholesale payments and interbank settlement and thus build on and extend the work done in other parts of the world,” a statement from SARB says.
The project is being carried out in collaboration with ConsenSys, ethereum’s technology company and PwC.
“Key considerations that need to be addressed include the evaluation of supporting frameworks and other systems that integrate with the RTGS system, as well as the legal, regulatory and compliance factors,” SARB said in a statement according to a local news outlet.
The central bank will also look into whether the distributed ledger technology is suitable for interbank settlements, a statement says.
The platform will not replace the existing real-time settlement system just yet, SARB’s deputy governor Francis Groupe says. It will be used instead as a fourth layer back up.
Several banks globally are testing blockchain, the technology that powers bitcoin and other cryptocurrencies for various applications including cross-border transfers and to record internal transactions.
RippleNet, a blockchain solution for global payments built by Ripple is one of the most widely tested platforms. Hundreds of banks across the world have successfully tested it as a possible successor to the old SWIFT messaging system currently used by many banks.
The San Francisco based company claims it can cut cross-border transfer costs by as much as 60% when used together with its native XRP tokens or 30% when used alone.