R3 partners with ADB to enhance cross-border transactions across Asia

By Leandra Monteiro

R3 is partnering with the Asian Development Bank (ADB) as part of its latest project to make cross-border securities transactions in Asia Pacific more efficient and secure through the use of blockchain technology, launched today. The project is a proof-of-concept (POC) for a cross-border multi-currency securities settlement system based on distributed ledger technology (DLT) in Asia Pacific.

The project is set to facilitate discussions in the Cross-Border Settlement Infrastructure Forum (CSIF) of the Asian Bond Markets Initiative (ABMI). ABMI comprises central banks and central securities depositories (CSDs) from across the Association of Southeast Asian Nations (ASEAN) and the Republic of China, Japan, and the Republic of Korea — collectively known as ASEAN+3.

Cross-border securities transactions in the ASEAN+3 region are currently processed through a global network of custodians and correspondent banks, which go through global centers in either the United States or Europe. As a result, intraregional transaction settlements in ASEAN+3 take at least 2 days, due to time differences as well as varying operating hours for markets within the same time zone.

Directly connecting the institutions within a blockchain network could reduce both transaction costs and settlement risks, including the possibility that securities are not exchanged within an agreed time frame. Alongside other leading blockchain companies, R3 will support ADB as it seeks to develop ways to directly connect central banks and CSDs in the ASEAN+3 region within a blockchain network.

Amit Ghosh, Chief Information and Services Officer at R3 said, “We are proud to be partnering with ADB to share our expertise as we collectively work towards building a connected cross-border settlements infrastructure in Asia Pacific. Cross-border settlement systems are notoriously complex, and are plagued with inefficiencies that result in high fees, limited transparency, and delayed settlement times. In an arena where high value transactions are moving across regulated markets through multiple parties and processes, trust is paramount and interoperability is nevermore critical. R3’s Corda has long facilitated this, enabling digital trade and a global faster payments infrastructure, while demonstrating the merits of blockchain at the frontiers of trust technology.”

The project will be carried out in 2 phases: a designing phase, to be completed by the end of March 2022, and a prototyping phase, scheduled for the second quarter of 2022. The results will be discussed with ASEAN+3 government officials and members of the Cross-Border Settlement

Infrastructure Forum of the Asian Bond Markets Initiative, made up of central banks and securities depositories from across the region.

Beside spurring discussions around a DLT-based intra-regional market infrastructure that will bolster efficiency and security in cross-border financial transactions, R3, together with other project partners, will also examine systems interoperability and the viability of Central Bank Digital Currencies (CBDCs) in the region.