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WSJ: Synchrony Financial Joins R3 Blockchain Group

Synchrony Financial Joins R3 Blockchain Group – The Wall Street Journal

By Kim Nash 24 October 2016

Synchrony Financial, the largest U.S. issuer of retail-store credit cards, has joined R3 CEV, a consortium of companies working on blockchain technologies. Synchrony, which is the first credit-card issuer to participate in the group of more than 70 banks, vendors and other companies, expects to focus first on using blockchain to settle payments, “We have been watching very closely how blockchain systems are being built and how money may be moving,” Chief Information Officer Carol Juel told CIO Journal Monday. Blockchain could “be a sea change” in how financial transactions are processed, she said. “If and when that happens, no one will be able to do it alone,” Ms. Juel said. “For it to work, we have to work collectively.” By participating in a consortium, Synchrony Financial can help influence the development of the technology, she said. Synchrony has not hired any software developers with specific backgrounds in blockchain, instead selecting technology architects from existing staff to work on the projects, Ms. Juel said. Finding blockchain experts has been difficult for financial services and other firms because relatively few technology professionals with deep experience with the emerging technology exist. Wall Street firms are vying with established and startup technology firms for such talent, prompting some to demand big compensation packages. Despite ongoing talent shortages, financial companies are beginning to introduce online ledger efforts into the wild. Commonwealth Bank of Australia and Wells Fargo & Co. said on Monday that they used a blockchain in a $35,000 shipment of cotton to China from the United States, Reuters reports. The Wall Street Journal reported Friday that Visa Inc. unveiled a network it hopes to apply towards managing cross-border payments made between businesses.

IBT: Toyota Financial Services joins R3 distributed ledger consortium

 

FT: Canada experiments with digital dollar on blockchain

Philip Stafford    

 6/17/2016

Canada experiments with digital dollar on blockchain ­

Last updated: June 16, 2016 5:06 pm Philip Stafford Canada is exploring the creation of a digital version of its currency as central banks examine whether modern technology can create a new medium of exchange.

The Bank of Canada, the country’s central bank, revealed in a private presentation in Calgary on Wednesday that it was working with the country’s biggest banks to develop an electronic version of the Canadian dollar.

It is examining how to put a government ­backed, or fiat, currency on blockchain, the digital ledger that underpins cryptocurrency bitcoin. Full adoption would mark a significant advance for the emerging technology.

According to slides seen by the Financial Times, the initiative will involve issuing, transferring and settling central bank assets on a distributed ledger via a token named CAD­Coin. It is being carried out in conjunction with several of Canada’s biggest banks, including Royal Bank of Canada, CIBC and TD Bank, as well as Payments Canada. It is using intellectual property developed by R3, a New York consortium of more than 50 of the world’s biggest banks.

Financial institutions have been keen to exploit the much­hyped technology, which works as an electronic ledger that is continuously maintained and verified in “blocks” of records. It is shared on computer servers between various parties and protected cryptographically to prevent it from being altered.

Putting a fiat currency on a distributed ledger could pave the way for customers to deposit money with their central bank directly rather than use a commercial bank. The Bank of Canada said the experiment was a proof ­of ­concept and confined to interbank payment systems. “Other frameworks need to be investigated, and there are many hurdles that need to be cleared before such a system would ever be ready for prime time,” said Carolyn Wilkins, senior deputy governor of the Bank of Canada. “None of our experiments are to develop central­bank issued e­money for use by the general public.”

Advocates have argued that blockchain — which combines the peer­ to ­peer computing ethos of Silicon Valley with the money management of Wall Street — can free up billions of dollars of costs included in delays and insurance within the financial system.

Attacks on banks using existing payments infrastructure such as Swift have also highlighted security flaws. Sceptics of blockchain say the technology does not adequately improve existing market operations such as settlement systems. They also say that the technology’s promise cannot be fulfilled until government­backed currency is issued on the ledger.

 In a speech last year Andrew Haldane, chief economist at the Bank of England, said the central bank may be able to use a government­backed electronic currency as a way to levy negative interest rates

Under Project Jasper, participants would pledge cash collateral into a special pool, which the central bank would convert to CAD­Coin. That would be then used as a medium of exchange but the central bank would retain the ability to destroy redeemed CAD­Coins.

Other central banks, notably the US Federal Reserve, have also been exploring its use. Earlier this month the US central bank hosted a meeting of 100 central bankers and regulators from around the world to discuss its future.

 

6/17/2016 Canada experiments with digital dollar on blockchain ­