Last week at the SIBOS banking conference, Daisuke Kamai from Japan’s MUFG bank outlined how NTT Data’s TradeWaltz blockchain aims to address one of the key challenges of blockchain consortia, digital islands. A quick hint: in the short term, it’s not blockchain interoperability.
The lessons learned came from MUFG’s experience with a new trade finance method, the Bank Payment Obligation (BPO) and why it didn’t take off. The BPO was formally launched in 2013. Despite backing from the International Chamber of Commerce and SWIFT, it suffered a lack of take up. Some blamed SWIFT for the costs involved if a bank only processed a few trades.
MUFG was one of the banks that launched BPOs and Kamai said its clients liked it and found real benefits. But the huge problem was that there were only 20 banks around the world that supported it. Trade and trade finance only work when you can do deals with sufficient numbers of counterparties, and with BPOs there weren’t enough.
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