The South African Reserve Bank (SARB) has just completed a multi-bank testing of bank-to-bank transfers using blockchain.
South Africa’s central bank has been testing the Ethereum based platform Quorum in collaboration with eight banks including SARB, Absa, Capitec, Discovery, Investec, FirstRand, Nedbank, and Standard Bank.
The program, called Project Khoka spread over 14 weeks, conducted tests which replicated transactions normally handled by the South African Multiple Gross Operation Settlement System (SAMOS), rather than handling actual transactions. The project was aimed at proving that a DLT based program might be able to replicate SAMOS which can handle 70,000 daily transfers in two hours.
Project Khoka successfully used public cloud servers offered by Microsoft Azure and Amazon Web Services to add power needed for the transaction verifications. SARB was happy with the outcome of the tests and claimed that the Quorum blockchain handled the transfers with “scalability, resilience, confidentiality, and finality.” The SARB post-test report stated:
“Both the process, as well as the outcome of the project, contribute to the SARB’s goals. The decision was made to assess the use case for DLT in wholesale payments and interbank settlement and thus build on and extend the work done in other parts of the world.”
SARB suggested that more testing would be required before DLT is suitable for such interbank settlements as exhibited in the trial, and if proven satisfactory for bank use would most probably be utilized as a backup system, rather than actually replacing its current system, according to Francois E. Groepe, SARB’s Deputy Governor.
Banks are increasingly testing DLT for interbank settlements around the world, some aiming to use blockchain in order to update outmoded systems. Recently the Bank of England announced that it was rebuilding its Real Time Gross Settlement (RTGS) system to work with DLT. The announcement came after BoE Governor Mark Carney commented that private business and platforms need to be able to work with the bank’s own RTGS system.
RTGS is a system generally used to transfer large volumes of funds between banks.
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