ADB starts dabbling in blockchain technology

MORE than a decade after Satoshi Nakamoto released a white paper on Bitcoin, the Asian Development Bank (ADB) announced it will be undertaking a project that will connect central banks and securities depositories in the Asean+3 region via blockchain technology.

The ADB said doing so will make cross-border securities transactions in Asia and the Pacific more efficient and secure. The Asean+3 region consists of member-states of the Association of Southeast Asian Nations plus Japan, the People’s Republic of China and the Republic of Korea.

“Directly connecting the institutions within a blockchain network could reduce both transaction costs and settlement risks—the possibility that securities are not exchanged within an agreed time frame,” ADB said in a statement.

The ADB said the project will be carried out in two phases: a designing phase, to be completed by the end of March, and a prototyping phase, scheduled for the second quarter of 2022.

The results will be discussed with Asean+3 government officials and members of the Cross-Border Settlement Infrastructure Forum of the Asian Bond Markets Initiative. The latter is made up of central banks and securities depositories from across the region.

The ADB said it is partnering with ConsenSys Inc., Fujitsu General Ltd., R3 LLC and Soramitsu Co. Ltd. on the project.

According to the ADB, the project will examine systems interoperability and the viability of central bank digital currencies in the region. The lender said the project is supported by ADB’s Digital Innovation Sandbox program, a platform for partners across the public and private sectors to collaborate on digital solutions.

The ADB said cross-border securities transactions in the Asean+3 region are currently processed through a global network of custodians and correspondent banks, which go through global centers in either the United States or Europe.

As a result, intraregional transaction settlements in Asean+3 take at least two days, due to time differences as well as varying operating hours for markets within the same time zone. 

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