NextGen Day

The Asian Development Bank (ADB) has announced an initiative to leverage blockchain technology to make cross-border securities transactions in Asia and the Pacific more efficient and secure.

ADB will aim to establish mechanisms to directly connect central banks and securities depositories in the Asean+3 area within a blockchain network in collaboration with top blockchain businesses.

The Association of Southeast Asian Nations (ASEAN) is joined by Japan, the People’s Republic of China, and the Republic of Korea to form the area.

Directly connecting institutions inside a blockchain network might lower transaction costs while also reducing settlement risks, or the danger of assets not being transferred within the agreed-upon deadline.

Cross-border securities transactions in the Asean+3 region are currently conducted 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 disparities as well as varying working hours for marketplaces within the same time zone.

The project will be divided into two phases: a design phase that will be finished by the end of March 2022, and a prototyping phase that will begin in the second quarter of 2022.

The findings will be discussed with Asean+3 government officials and members of the Asian Bond Markets Initiative’s Cross-Border Settlement Infrastructure Forum, which includes central banks and securities depositories from across the region.

The study will also look into system interoperability and the viability of central bank digital currencies in the region, with ADB collaborating with ConsenSys, Fujitsu, R3, and Soramitsu.

The project is funded by the Asian Development Bank’s Digital Innovation Sandbox program, which provides a venue for public and private sector partners to engage in digital solutions.

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