ADB using blockchain to secure cross-border securities transactions

The Asian Development Bank (ADB) is tapping blockchain technology for faster and safer securities transactions across 10 Asean member-states, China, Japan and South Korea.

In a statement on Wednesday, ADB said it was developing a prototype for a cross-border securities transaction system with the help of top blockchain firms in the region.

ADB’s partners include ConsenSys, Fujitsu, R3 and Soramitsu. These four companies “will also examine systems interoperability and the viability of central bank digital currencies in the region,” the ADB said.

Less costs, risks

The Manila-based multilateral lender wanted a blockchain network to directly connect Asean+3’s central banks and securities depositories for more efficient and secure transactions.

“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 two days, due to time differences as well as varying operating hours for markets within the same time zone,” the ADB noted.

Once in place, the blockchain network is expected to slash both transaction costs and settlement risks, which the ADB defines as “the possibility that securities are not exchanged within an agreed time frame.”

The project’s first of two phases involving designing will be finished by the end of March. The prototyping phase will be done during the second quarter of this year.

“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,” the ADB said.

The ADB’s public-private digital innovation sandbox program is also supporting the project’s rollout.

—Ben O. de Vera