Three Canadian banks have signed on with a San Francisco company to use technology that moves money across borders in seconds rather than days, according to a Globe and Mail
National Bank of Canada, Canadian Imperial Bank of Commerce and ATB Financial have signed on with Ripple Labs to use blockchain technology, the tech that underpins Bitcoin. The news comes a week after the Bank of Canada announced it was experimenting with the technology.
Blockchain is a distributed ledger, which uses networked computers to record and settle transactions, the Globe and Mail reported. Boosters say the technology can improve the speed of transactions and increase the efficiency of financial systems.
“The world is basically a series of siloed payment networks,” Chris Larsen, Ripple co-founder and CEO, told the Globe and Mail
. Larsen said that those segregated networks can slow cross-border money transfers by days. Blockchain, however, can make the process instantaneous, while reducing errors and increasing efficiency.
“We’ve looked at what are the real pain points for banks, and it’s pretty clear that cross-border transactions is an area where we can solve a problem right now,” Larsen told the Globe and Mail
According to Larsen, current inefficiency costs the global financial system as much as U.S. $1.6 trillion per year.
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