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Standard Chartered, Siemens Partner to Put Bank Guarantees on a Blockchain

Multinational banking firm Standard Chartered is teaming up with the financial arm of manufacturing giant Siemens for a pilot scheme that puts bank guarantees for trade finance on a blockchain.

According to a report from IBS Intelligence, the effort – that also includes assistance from digital ledger firm TradeIX – is aimed to move the process on from the traditional paper-intensive process and fully digitize bank guarantee issuance from end to end using automated smart contracts.

Built with blockchain startup R3’s open-source Corda platform, with an application layer provided by TradeIX, the “industry-defining solution … will transform the way guarantees are issued and processed,” said Motasim Iqbal, head of transaction banking UAE at Standard Chartered.

If the pilot proves successful, it will allow firms like Siemens to bring new efficiencies for large clients, digitizing guarantee issuance, amendments and claims, according to the report.

Michael Bueker, Siemens’ chief financial officer, predicted that integrating the blockchain trade finance solution into the firm’s daily operations would “streamline our processes and make our trade finance operations smoother, faster and more efficient.”

Launched in March, the trial is expected to be completed later in 2018.

This is not the first foray by Standard Chartered into the blockchain space: in fact, as far back as 2015 the bank was touting the potential of the tech in trade finance.

In the years since, it has embarked on various trials and development partnerships, most recently acting as banking partner for a blockchain-based remittance service launched by Ant Financial, the payment affiliate of Chinese e-commerce giant Alibaba.

Similar to letters of credit, bank guarantees are issued by lending institutions as a pledge that the liabilities of a debtor will be met.

Standard Chartered image via Shutterstock

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Thailand's Central Bank Is Developing a Digital Currency Based on R3 Tech

The Bank of Thailand (BoT) has announced it expects to complete the first phase of a proof-of-concept trial for a central bank digital currency (CBDC) by March 2019.

The Thai central bank said in a release on Tuesday that it has partnered with eight financial institutions in the country in a bid to create a CBDC based on Corda, a distributed ledger technology (DLT) platform developed by the enterprise-focused consortium startup R3.

The ultimate goal of the effort is to use the digital currency to facilitate interbank transactions and to “enhance efficiency of the Thai financial market infrastructure,” according to the announcement.

To assist with the so-called Project Inthanon, the BoT has signed up R3 as technological partner and eight other participating institutions, including Bangkok Bank Public, Krung Thai, Siam Commercial Bank, Standard Chartered Bank (Thailand) and HSBC.

“Project Inthanon Phase 1 is expected to be completed by the first quarter of 2019 after which the BoT will publish a project summary accordingly,” the bank said in the announcement.

It continued:

“Building upon the findings and outcomes from Phase 1, the project participants aim to further develop the capabilities of the prototype for broader functions including third party funds transfer and cross-border funds transfer.”

The central bank’s governor first revealed the initial concept for the project in a speech in June, commenting at the time that the aim is to explore the potential of blockchain in facilitating cross-bank transactions before it can be formally launched at a larger scale.

With the launch of Project Inthanon, the BoT joins a growing group of central banking authorities to have started trialing DLT systems to facilitate interbank and cross-border transactions, including the Hong Kong Monetary Authority and the Bank of Canada.

The BoT also said in the release that it is currently conducting another DLT proof-of-concept designed to boost the efficiency of government bond sales.

Thai baht image via Shutterstock

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Blockchain Remittances Face Efficiency Hurdle, Says Taiwan Central Bank

Blockchain systems for interbank clearance and remittance may not be as efficient as centralized systems just yet, according to a report released by the Central Bank of Taiwan.

Announced by the bank’s new governor Yang Chin-long at a press event Thursday, the report outlined various explorations currently being conducted by the island’s central banking authority into financial technology, including a proof-of-concept utilizing distributed ledger in interbank remittance.

Collaborating on the effort are members of academia and the Taiwan Clearing House (TWNCH), an authority that handles financial product settlements among financial institutions, under supervision of the central bank.

Through the proof-of-concept, the central bank said it has simulated a system that uses its own digital currency to make direct payments between banks, and is managed by an Automated Clearing House (ACH) system developed by the TWNCH.

However, the initial results suggest that the distributed system so far does not appear to be as efficient as the existing, centralized ACH system.

While two different tests using the blockchain PoC were able to process 4 and 26 transactions per second, respectively, such speeds are significantly less than the 2,700 transactions per second managed by the ACH system.

Furthermore, the reliability of the blockchain platform could also be an obstacle, the report said:

“In addition, the testing result shows there are problems of confidential information leak and malfunctions in individual nodes.”

The central bank said, though, that blockchain technology is still at an early stage and is developing rapidly, and it doubled down on its commitment to widen efforts to conduct more testing with the clearing house and financial institutions. Yang previously promised to boost blockchain adoption in Taiwan during his tenure in his February inauguration speech.

In other news, the Yang remarked Thursday, according to a local report, that bitcoin may be the “biggest bubble in history.” He has previously said that cryptocurrencies have diverted from their intended purpose in payments towards becoming a mere tool for speculation.

Taiwan dollar image via Shutterstock

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Japanese Shipping Giant, IBM to Trial Blockchain in Cross-Border Trade

Japanese shipping firm Mitsui OSK Lines (MOL) and partners including IBM are to undertake a blockchain proof-of-concept looking to streamline international trade flows.

According to the company’s statement, the “demonstration test” will see real-time trade transactions made using a blockchain-based application. The test will see trade agreements, logistics and insurance documents, and more, digitized, stored and shared among participants, bringing a number of benefits over traditional trade systems.

MOL states:

“The test is intended to verify the effectiveness of blockchain for enhancing security and reducing the time required to settle cross-border trade transactions, discrepancies among related documents and administrative costs.”

Aiming to increase competitiveness and develop new products via the technology, joining MOL on the project are IBM Japan, the Japan Research Institute, Sumitomo Mitsui Financial Group (SMFG), Sumitomo Mitsui Banking Corporation and other arms of the Mitsui Group.

The proof-of-concept will utilize the Hyperledger Fabric blockchain framework, developed by the Linux Foundation-led Hyperledger blockchain consortium.

SMFG was recently revealed to be among a group of Japanese financial institutions that successfully tested a prototype using distributed ledger technology (DLT) to streamline international transaction agreements. That work used DLT startup consortium R3’s Corda software to streamline an ISDA Master Agreement negotiation.

Container ship image via Shutterstock

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BNP, EY Complete Blockchain Trial for Internal Treasury Operations

BNP Paribas and “Big Four” accounting firm EY have completed a trial aimed to investigate the feasibility of using a private blockchain to improve the bank’s global internal treasury operations.

The blockchain system was put through internal testing by BNP’s ALM Treasury department earlier this summer.

According to a statement, the “successful” trial proved the potential of the private blockchain to drive operational efficiency by providing a more “integrated cash management approach” and allowing “greater flexibility and a 24/7 capability.”

The pilot demonstration reportedly helped BNP Paribas boost the “interoperability of the legacy systems combining the private blockchain with existing IT environment via software robots and APIs.”

According to Xavier Toudoire, the bank’s head of ALM Treasury IT strategy and architecture, private blockchain technology allows the development of different business and operational processes not previously possible due to distribution of data and trust among parties.

“Although it is still too early to determine how the technology will evolve and whether it is suitable for large-scale deployment, our pilot has demonstrated the clear strengths of private blockchain and its potential as one of the most effective ways to improve the existing internal processes between different businesses on an international level,” he said in the statement.

The pilot is the latest in a series of blockchain initiatives by various entities of the bank, including Cash without Borders launched by the bank’s Transaction Banking business.

BNP Paribas image via Shutterstock

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Ukraine's Government Plans to Auction Seized Assets On a Blockchain

Ukraine’s justice ministry has begun testing the use of a blockchain to digitally auction seized assets, according to a report by Reuters.

The use of the platform will expand as the year progresses, with an eye to implementing state property and land registries onto the blockchain by the end of the year.

According to the report, Deputy Minister Serhiy Petukhov explained:

“We want to make the system of selling seized assets more transparent and secure so that the information there is accessible to everyone, so that there aren’t concerns about possible manipulation.”

Towards this goal, the government has been formally partnered with blockchain firm Bitfury since April.

CEO of Bitfury, Valery Vavilov, stated at the time that, “A secure government system built on the blockchain can secure billions of dollars in assets and make a significant social and economic impact globally by addressing the need for transparency and accountability.”

The partnership represents an effort within Ukraine to modernise institutions and reduce corruption through blockchain tech. In exchange, the Ukrainian authorities have been granted a $40 billion bailout from the International Monetary fund and other donors, Reuters reported.

Ukraine justice building image via Shutterstock

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Indian State Partners to Build Public Sector Blockchain Applications

Andhra Pradesh, India’s seventh largest state, has announced a new partnership with cybersecurity company WISeKey to secure citizen data with blockchain tech.

Citing the huge volumes of individuals’ data being held on databases, and the wave of recent cybercrime attacked worldwide, the state said it plans to protect government-recorded data using WISeKey’s blockchain technology. The partnership will see the development of various pilot projects across different departments of the state government, as well as potentially an expansion into other fields such as smart cities.

“We are looking towards WISeKey to play a leadership role in providing cybersecurity for the various initiatives of the government, but also drawing out the vision for smart cities who want to go beyond IoT … and use ‘Deep Tech’ algorithmic technology, said J.A. Chowdary, IT advisor to the state’s chief minister, in a statement.

N. Balasubramanyam, transport commissioner for Andhra Pradesh, also revealed a plan to implement blockchain into transportation, adding that it would be one of the “first states in the world” to do so.

Carlos Moreira, founder and CEO ofWISeKey, said of the project:

“To have a pristine vision like putting the citizen at the center of gravity, and building all the infrastructure around this vision is the key to successfully empower citizens to unleash their full potential.”

Andhra Pradesh has been pursuing blockchain for some time and previously explored the use of the tech for land registries, as reported by CoinDesk.

Notably, the state is home to the “Fintech Valley Vizag” – a business infrastructure initiative led by the Andhra Pradesh government, which has been heralded as the locus of fintech disruption in India.

India document image via Shutterstock

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GSA Official: Blockchain Procurement Prototype Is Moving Forward

The U.S. government could soon trim the time it takes to process an IT procurement bid using blockchain tech.

As CoinDesk reported in June, the General Services Administration (GSA) is in the early stages of developing a blockchain prototype that could one day replace FAStlane, a procurement system dedicated to IT projects. The initiative forms part of a wider bid within the GSA to investigate distributed ledger use cases, which itself constitutes one part of the U.S. government’s wider blockchain effort.

Speaking with public sector IT website MeriTalk, Jose Arrieta, a director within the GSA’s Federal Acquisition Service who oversees work on IT procurements, struck a bullish tone on the tech’s prospects as it relates to the acquisitions process. He said that work continues on the FAStlane prototype, pointing to September 30 as a milestone in the proof-of-concept process.

Perhaps most notably, he suggested that approvals – which can take as long as a month, if not more – could happen in a matter of days should the tech be more widely implemented.

“The single most important thing about blockchain is that it creates transparency and accuracy between two entities,” he told the publication, adding:

“We believe with blockchain we might be able to reduce the number of days to single digits.”

Part of the equation, according to Arrietta, is the ability to “sew together” the different parts of the IT procurement process, with the idea being that different parts of that system can communicate with one another more effectively.

Conveyor belt image via Shutterstock

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