Two of the biggest banks in North America are partnering to experiment with blockchain.<\/p>\n
The National Bank of Canada, along with JP Morgan Chase, is testing a blockchain platform they will use to issue different financial instruments and streamline origination, settlement, interest rate payments and other processes.<\/p>\n
The Canadian bank issued a $150 million USD one-year floating rate Yankee certificate of deposit and mirrored that issuance on a blockchain platform as well. In this case, \u201cYankee\u201d denotes any certificate of deposit issued by a foreign bank\u2014in this case, Canadian\u2014in the U.S. The test will involve the two banks mirroring execution of the actual transaction through an application built on Quorum, an open-sourced variant of the ethereum blockchain. Quorum was developed by JPMorgan Chase in-house.<\/p>\n
Participants who invested in the Yankee certificate that helped spawn the mirrored spinoff blockchain test include Goldman Sachs Asset Management (GSAM) and Pfizer.<\/p>\n
“Blockchain-related technologies have the potential to bring about major change in the financial services industry,\u201d said David Furlong, SVP of AI, venture capital and blockchain at National Bank of Canada. \u201cThis is a unique opportunity for us to expand our knowledge of blockchain. National Bank of Canada will continue to innovate over the coming years and remain on the lookout for ways we can bring our partners greater value.\u201d<\/p>\n
These kinds of tests involve seeing how a blockchain platform would handle a massive investment fund and work with multiple different parties involved. Though it is just research, initiatives like this are organized to see how blockchain can add value and efficiency to these massive banks\u2019 existing platforms.<\/p>\n
“This is an exciting example of how J.P. Morgan leveraged our combined capabilities in capital markets and blockchain technology, delivering results to a diverse set of clients,\u201d said Christine Moy, blockchain program lead at J.P. Morgan. \u201cWe look forward to exploring blockchain-enabled capital markets applications, how these types of transformative opportunities can benefit our clients and counterparts, and how working together on open source technology like Quorum can enable and accelerate this progress.”<\/p>\n
The best kinds of outcomes from tests like these would revolve around added transparency for consumers, streamlined processes, and minimized transaction costs. But banks have to be careful\u2014those optimized transaction fees could result in a lot of lost income<\/a>.<\/p>\n