R3 and Asian Central Banks Join Forces to Unravel Central Bank Digital Currencies
R3, currently one of the largest enterprise blockchain technology companies in the world, evolved from just a global consortium of banks. Headquartered in New York, the consortium first started with nine financial institutions, including Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse, Goldman Sachs, J.P. Morgan, Royal Bank of Scotland, State Street and UBS.
The benefits of blockchain have been continually being explored by R3 and the 300 members in its ecosystem, including banks, financial institutions, regulators, and trade associations. Corda, the firm’s open-source blockchain platform, was built with the support of members in the ecosystem, while Corda Enterprise was developed to meet the network infrastructure requirements of highly regulated industries.
Blockchain.News spoke with Carl Wegner, the Head of Asia Pacific at R3, who has been with the company for over three years, with a major focus on developing business and partnership opportunities for the consortium. Having been in the trade finance industry for over 30 years, Wegner feels that it is an incredible opportunity for blockchain to help streamline processes.
“In the .com days, I went to work for a software company that helped automate some of it. With distributed ledger technology, and the ability for ledgers to talk to each other is going to change how companies work, in the next 5 to 10 years,” said Wegner.
He added that with the introduction of the internet and email, communication became more direct, ubiquitous, and cheap. “Communication is so much easier because of the internet. Distributed ledger technology is going to allow companies to interoperate and work together closely as we all connect together on social media and email.”
Global reach with a focus in Asia
At the very beginning, when R3 was still just a consortium, Wegner stated, “We’ve looked at being global, even a third of investors come from Asia, a third US, and a third Europe. We’ve always tried to be as global as possible.”
According to Wegner, Asia has been gaining momentum since trade finance is one of the major industries in the region, and R3 has been working with the region’s central banks. “For instance, for Project Inthanon, we’ve been working with the Bank of Thailand, the country’s central bank,” said Wegner. At the Hong Kong Fintech Week Held in early November, it was announced that Phase 3 of Project Inthanon involve Hong Kong’s de facto central bank, Hong Kong Monetary Authority's collaboration, along with Hong Kong’s Project LionRock, which aimed to understand the feasibility of implementing central bank digital currencies (CBDCs). The two authorities, the HKMA and the Bank of Thailand, have joined forces to create Project LionRock-Inthanon, to conduct joint research on the application of CBDCs.
R3 has also been working with the Monetary Authority of Singapore (MAS) for Project Ubin, a project aimed at using blockchain to solve the current challenges in clearing and settlement processes of payments and securities. The MAS leveraged R3’s expertise to evaluate whether a tokenized Singaporean Dollar would have potential benefits for the country’s financial ecosystem.
Central banks must understand how blockchain is changing the world
Wegner added, “We will continue to work with the central banks to really help them understand central bank digital currencies. A lot of it is for the central banks to understand what regulations might have to be changed, how this could affect their payment systems. Central banks really have to understand how this is going to change their world, and research is probably as big as a part of the project as the technology.”
He further explained that central banks have been getting more technical, programming, and coding by the central banks has also vastly exceeded expectations. “It’s great they’re hands-on with their learning. That’s the best way for them to feel comfortable about moving ahead and building on blockchain.”
As R3 has been focusing on the financial services sector, Wegner stated as the industry is highly regulated, solutions provided will be of a challenge for the sector to adjust to. “People are building solutions on Corda, we also have to make sure that the central banks feel comfortable with products built on Corda. We do work quite closely with the central banks to help them better understand blockchain technology and distributed ledger technology, and how they can collaborate better together.”
Corda, the platform industries want to build on
As R3 has been mainly invested in by banks, the major focus of building the distributed ledger platform was catered towards the financial services industry. Wegner mentioned that the most significant areas of development in the financial services industry are in trade finance, insurance, supply chain, and digital assets.
Other than the financial services sector, Wegner said that other industries such as healthcare has been gaining momentum in the development and integration with Corda, as these industries would be able to reap the technology’s benefits of tracking and provenance. “Now we’ve discovered that a lot of other industries also want to use the same service, the Corda platform. Since we’re built for financial institutions with that kind of stability and reliability, this is also the platform other industries want to build on.”