Japan`s Biggest Bank Plans Blockchain Money Transfers By 2018

Japan`s Biggest Bank Plans Blockchain Money Transfers By 2018

The Bank of Tokyo-Mitsubishi UFJ (BTMU), the banking arm of the Mitsubishi UFJ Financial Group (MUFG), has collaborated with Ripple on a project aimin

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The Bank of Tokyo-Mitsubishi UFJ (BTMU), the banking arm of the Mitsubishi UFJ Financial Group (MUFG), has collaborated with Ripple on a project aiming to establish an international blockchain payments network of global banks.

Ripple is a venture-supported start-up based in San Francisco. Their services provide global financial settlement solutions by enabling banks to transact directly and real-time over the internet, reads on bk.mufg.jp, the official website of MUFG.

MUFG has announced joining the Global Payments Steering Group (GPSG), Ripple`s interbank group for global payments based on distributed financial technology.

“As the first bank in Asia selected by GPSG to participate, MUFG joins other participating banks such as Bank of America Merrill Lynch, Santander, Standard Chartered, Westpac Banking Corporation, Royal Bank of Canada, and CIBC in working on GPSG.”, stated MUFG in their announcement.

Ripple has said that up to 90 banks around the world could participate in the international banking network.

“We welcome MUFG, one of the largest and most advanced banks in the world, to the growing number of Ripple customers moving actual money across borders, instantly. While many others continue to play in the sandbox, we’re thrilled MUFG has joined us in our mission to revolutionize payments globally.”, commented the CEO of Ripple Brad Garlinghouse as quoted by the publication.

Why Blockchain is useful for banks?

The Bank of Tokyo-Mitsubishi UFJ (BTMU) has investigated the blockchain technology by transferring money internationally to New York in a blockchain trial in late 2016, as cryptocoinnews.com reported. International transfers at the bank are now costing between 3,000 yen and 5,500 yen (approximately $27 and $50). Blockchain reduces costs by eliminating the need for intermediary bank on the SWIFT network, added the publication.

A common blockchain ledger with verified participants can enable immediate fund transfers and settlements in a day-long process. In this way, charging high fees for transfers will become unnecessary. Banks could lose revenue streams from service charges of users, but there will be savings gained from investments in systems infrastructure and cybersecurity costs.

As Nikkei (asia.nikkei.com) wrote, MUFG is expected to offer its blockchain service to individual users in early 2018 commercially. Later on, they have plans offering it to corporate clients.

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