A group of 11 global banks, including Bank of Montreal (BMO) and Toronto-Dominion Bank (TD), have successfully carried out a test of distributed ledger technology, which is being explored as a way to execute financial transactions faster and more efficiently.
New York-based financial technology company R3 CEV announced on Wednesday that the banks participated in a distributed ledger experiment that explored “the technology’s potential to execute financial transactions instantaneously across the global private network. The banks simulated exchanging value, represented by tokenized assets on the distributed ledger without the need for a centralized third party.”
The experiment “represents a significant milestone in collaboration for the R3 consortium and a major step forward for the application of distributed ledger technology across the entire industry,” the company’s announcement says. It adds that this test is the first in what will be a series of projects, using a variety of distributed ledger technologies, designed to examine the use of distributed ledgers for financial markets.
“The transition from vision and hypothesis to application and execution signifies the next major step towards using this technology to transform how institutions interact, report and trade with each other in financial markets,” says David Rutter, CEO of R3, in a statement. “This is a very exciting development, both for R3 and our member banks, as well as the global financial services industry as a whole.”
“The successful completion of this experiment validates the potential of blockchain technology and we will continue to play a meaningful role in its development, along with our partners in R3,” adds Cameron Fowler, group head of Canadian personal and”ial banking at BMO.
“At TD, we have an ongoing commitment to technical innovation. To be successful, we need to collaborate in the spaces that allow us to provide continued excellence for our customers,” says Jeff Henderson, EVP and CIO for TD Bank Group. “Blockchain and R3’s initial project is a sign of our industry’s willingness and ability to transform.”
In addition to BMO and TD, the participants in the experiment included Barclays, Credit Suisse, Commonwealth Bank of Australia, HSBC, Natixis, Royal Bank of Scotland, UBS, UniCredit and Wells Fargo. The R3 consortium, which was launched in September 2015, includes 42 global banks (including all of the Big Five Canadian banks).