The central bank of Argentina has pledged its support for a blockchain-based system developed using RSK technology. The proof of concept will be used to trial a system for account debit claims (payment system), utilizing the end-to-end traceability that is one of blockchain’s key strengths.
The initiative was green-lighted with the support of the 2019 Financial Innovation Roundtable, a consortium featuring the BCRA (Central Bank of Argentina), the Blockchain Group, whose members include IOV Labs, RSK’s parent company and Grupo Sabra and leading banks in the country such as Banco Santander and BBVA.
RSK’s smart contract technology, best known for its use in leveraging the Bitcoin network, will form the basis of the decentralized platform being created for the PoC.
A Multilateral Solution
One of the challenges that the architects of the banking blockchain project face is less a technical than a political one: ensuring the cooperation of all of the entities involved with the financial system pertaining to account debit claims. A number of banks, clearinghouses, and other financial agents have consented to collaborate on the project, with the goal of creating a messaging and record-keeping system that is more effective than current clearing systems. Ensuring the security of the system will also be paramount, to maintain data confidentiality, while demonstrating that blockchain can provide a more robust solution than traditional account settlement systems.
The Shape of Banking to Come
Central banks around the world have experimented with blockchain technology in various forms, with China leading the way. South America has also established itself as a hub of blockchain innovation, particularly among enterprises, with RSK and IOV Labs involved in a number of pilot schemes.
The PoC being undertaken with Argentina’s central bank will also explore the commercial applications of the proposed solution, and assess the value of the blockchain component at its heart. Upon completion of the testing phase, there is the potential for other banks to be invited to participate, as additional use cases for the distributed account system are identified.