Just a few months after the Bank of Russia set up a working group on blockchain technology in February, it took another step and established a research consortium in partnership with several major privately-owned Russian banks. In spite its staunch opposition against the bitcoin itself, it seems Russia’s c-bank has warmed up to using its underlying technology.
The announcement was made by the c-bank’s deputy governor Olga Skorobogatova during the International financial congress that took place in Saint Petersburg this past weekend. “We developed a technical prototype for message transmission via blockchain and will start testing it in real time with market participants shortly,” Skorobogatova told the Kommersant business daily. According to her, so far participation in the project have confirmed the Qiwi electronic payments company, the Accenture consulting company and the banks Binbank, MDM Bank, HMB Otkritie and Tinkoff bank. She also invited other banks, non-bank financial organizations and IT companies.
In Skorobogatova’s words, first will be tested messages within the ISO payment card system and the SWIFT financial messaging service. If the tests are successful, the next step will be to test the blockchain technology for payments.
The blockchain technology is a type of distributed ledger system (DLT), mostly used for generating and recording transactions with cryptocurrencies such as bitcoin. It can be applied to public online ledgers seen as a cheaper, more transparent, secure and efficient alternative to the current global financial system and in many other industries, such as healthcare. Banks could use the technologies to better track the movement of funds and countering money laundering.
The Bank of Russia is not the first central bank to seek other applications for blockchain, besides recording transactions with cryptocurrencies. The Bank of Canada, for example, is already testing intrabank payments via blockchain. The private banks are not staying behind and are also trying out the DLT. Last week IBM and the French bank Credit Mutuel Arkeaannounced they have successfully completed a project to improve the bank’s ability to verify customer identity and Santander UK is testing real blockchain payments.