Royal Bank of Canada (RBC) is testing blockchain solutions for sending funds to US-based banks, reported Reuters on Thursday. Distributed ledger technology would improve the speed of payments, said Martin Wildberger, RBC’s executive vice president for innovation and technology.
The bank developed its proprietary blockchain system in the past six months, using the services of Hyperledger, a developer devoted to the decentralized technology.
The distributed ledger system has been operational for a few weeks, duplicating the transactions of the standard interbank money transfers.
“We wanted to set it up as a shadow ledger so that we can demonstrate our leadership in exploiting that technology while at the same time recognizing that the technology is still early in its adoption phase,” Wildberger said.
And while traditional banks are wary of Bitcoin as a means of payment, they see blockchain technologies as a positive development. Currently, banks are testing the system of Ripple for speedy global transfers of funds.
The European Central Bank (ECB) already tested a small blockchain project in 2016, but did not find the technology convincing enough to support large-scale financial operations. Canada's Central Bank also did not find the blockchain system viable for its interbank payment operations.
But RBC is more optimistic:
“Everybody recognizes blockchain will be transformative and critical,” said Wildberger. “At the same point in time, I think everybody recognizes these are early days.”
And while commercial banks such as RBC, UniCredit and others are testing the technical potential of the blockchain, investment banks are split over the value of cryptocurrencies. While some believe cryptocurrencies can legally coexist with fiat and that governments would adapt, others believe the current situation is a bubble that cannot be sustained and would end badly.