Major Banks Citi, TD, and Wells Fargo Experiment with Regulator-Friendly Blockchain Technology

A group of banks and financial services players, including Citibank and the Federal Reserve Bank of New York, have tested a blockchain-based distributed ledger system for instant payments. The Regulated Liability Network (RLN) would operate a shared ledger with central bank, commercial bank, and electronic money on the same chain, enabling transactions to be settled instantly even during weekends or holidays. The 12-week proof of concept, which included participants such as Mastercard, Bank of New York Mellon, and HSBC, tested the viability of the RLN concept for domestic and cross-border payments in US dollars. The test was able to demonstrate five critical functional capabilities, including availability, efficient settlement, interoperability, and privacy. The RLN project aims to address the gaps in current payment systems and ensure the US dollar remains the international currency of choice. It is also seen as a potential solution to challenges faced by existing blockchain-based payment initiatives, which have struggled due to lack of support from regulators. The RLN concept is being seen as a viable payment system design that could revolutionize global instant dollar payments. However, the test did not assess throughput, scalability, or cybersecurity resiliency.

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