Four South Korean commercial banks will team up with 18 global big name banks to build an international money transfer system based on blockchain technology, which first emerged as the system underpinning cryptocurrency bitcoin.
Blockchain refers to a distributed ledger of transactions maintained by a network of computers on the internet rather than a centralized authority. Banks are hoping the technology can help them reduce the complexity in international payments and trading settlement.
The four banks agreed to join a global project called Argent (tentative, a French for money) which aims to develop a pilot system by the end of June in 2018, according to sources on Sunday. If realized, banks would be able to send money almost in real time beyond country borders. A typical international payment takes one to three business days to settle under the current SWIFT format. That could also mark the first time Korean banks apply the distributed ledger technology to interbank money transfer.
KB Bank, Shinhan Bank and Woori Bank will participate in a research program for Argent led by R3, the largest consortium of global financial institutions working on developing commercial applications using blockchain technology. KEB Hana Bank will join as an adviser. The consortium is also supported by 22 global banks including Barclays, US Bank, CIBC and HSBC.
With the direct bank-to-bank transaction system, money transfer fees are expected to be drastically lowered.
By Oh Chan-jong and Minu Kim
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