Ethereum blockchain technology is of great importance to many financial institutions all over the world.The Royal Bank of Scotland has completed development of a clearing and settlement mechanism using the Ethereum distributed ledger. Smart contracts are also being used to automate the remaining processes.
Although it is well-known that nearly every financial institution in the world is looking at blockchain technology, very few projects have come to fruition so far. The Royal Bank of Scotland is one of the first to openly discuss their project, which focuses on the clearing and settlement of financial transactions.
Combining blockchain technology with smart contracts makes a lot of sense for such a project. Under the Emerald banner, this blockchain-based trading system explores the creation of a Deferred Net Settlement system. The ultimate goal is to compete with FasterPayments, or at least discover whether or not distributed ledgers have any limitations in this field.
It has to be said that the Ethereum blockchain required some modifications to suit this particular need. In its regular form the Ethereum blockchain is hugely distributed and public, which is not exactly what RBS had in mind. Instead, they created a private, faster-moving ledger that focuses on speed and throughput.
In an official statement, The Royal Bank of Scotland mentioned:
“The test results evidenced a throughput of 100 payments per second, with 6 simulated banks, and a single trip means time of 3 seconds and maximum time of 8 seconds. This is the level appropriate for a national level domestic payments system.”
What is rather interesting is how RBS plans to make this project open source in the coming months. In their opinion the blockchain-based national domestic payments system performed beyond expectations. By making it available to the public, future tweaks and modifications can be made.
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