Well-known banks, too, are entering the digital asset space. The Asian Development Bank is looking to use blockchain technology for one of its projects.
ADB has plans to use blockchain to improve the security and efficiency of its cross-border securities transactions.
Moreover, this project will be operational in the Asia Pacific region.
Asian Development Bank Releases Statement
In its statement on January 26th, ADB discloses that a blockchain network will connect the Central Bank and securities depositors in the ASEAN and other three nations.
ASEAN stands for Association of South East Nations.
Malaysia, Myanmar, Brunei, Cambodia, Indonesia, Laos, the Philippines, Singapore, Thailand, and Vietnam.
Apart from these, China, Japan, and Korea will also be a part of the project.
The Asian Development Bank is collaborating with leading blockchain companies for this project. These companies include ConsenSys, Fujitsu, R3, and Soramitsu.
Importance of Blockchain Technology
Most of the business and finance world are excited about cryptocurrency. To be more specific, institutions are more thrilled about the technology that cryptocurrency uses, i.e., blockchain technology.
Blockchain is a public digital ledger.
This means that blockchain verifies the transaction every time someone buys or sells anything on crypto platforms.
Hence, blockchain eliminates the need to have a middleman like a bank. Additionally, it reduces transaction costs, increases privacy, and is open to the entire world.
The Asian Development Bank, too, is looking to take advantage of this technology. ADB said that they want to reduce their transaction costs. Moreover, ADB wants security exchanges to happen within a timeframe.
For cross-border transactions, banks take a long-time to process settlements depending on the time zone and market hours in different countries.
Hence, blockchain could make a real difference. Here transactions are processed in a matter of minutes.
Additionally, Asian Development Bank says that cross-border transactions for ASEAN countries, China, Japan, and Korea, take two days.
These settlements first go to global centers like the United States or Europe.
The delay is mainly due to differences in time zone and market hours. By using blockchain technology, this problem will get eliminated.
The first phase of the project will roll out by March 2022. The second prototyping phase will be over by the second quarter of 2022. ADB expects the project to be fully completed by the end of the year.
Asian Development Bank’s project finds support due to the bank’s digital innovation sandbox program.
The program is for partners to develop new solutions in the domain of blockchain, big data, robotics, and artificial intelligence.