The Central Bank of Argentina, BCRA, has joined a pilot scheme that will see RSK’s blockchain technology used to create a decentralized system for overseeing account debit claims.
The project was given the go-ahead by the 2019 Financial Innovation Roundtable, of which BCRA is a member, as well as several other banks including Banco de la Provincia de Córdoba, Banco Santander, and BBVA. The latter two banks are part of the Blockchain Group, which includes Grupo Sabra and RSK parent company IOV Labs.
The group began working on the project in late 2019, to provide better traceability and oversight of account debits made by bank customers. With Argentina’s Central Bank has thrown its weight behind the project, its prospects of seeing broader adoption have received a significant boost.
The solution that’s being developed, built on RSK’s smart contract technology, will form an alternative clearinghouse that can give participants greater oversight of account records, and reduce the likelihood of data being duplicated or corrupted. Much of the inefficiencies in the current clearinghouse system can be attributed to friction between banks and other entities within the financial system.
To maximize the pilot’s prospects of success, a broad range of financial entities have been onboarded from the start. Their participation will be crucial in determining the success of the blockchain proof of concept, and in dictating whether it is developed into a fully-fledged solution.
“We are convinced that, by implementing this type of platform, the financial system will be able to build an integral, collaborative ecosystem in line with the current modern technological advances and on par with the world’s most innovative financial systems,” said Diego Gutiérrez Zaldívar, CEO of IOV Labs.
His company RSK, which will be doing much of the heavy lifting on the technical side, has proven its smart contract technology with the decentralized finance ecosystem it is built around Bitcoin.
Originally envisioned as a peer-to-peer network for sending digital cash, Bitcoin and its underlying blockchain have spawned a myriad of use cases and iterations.
Enterprises and banks have been quick to latch onto blockchain’s ability to solve certain problems, including the facilitation of trustless trade, and the provision of a shared database whose historical state cannot be altered and whose current status can be multilaterally agreed upon, through all participants reaching consensus.
Now, Argentinian banks will be watching closely to see whether the same technology can breathe new life into the archaic clearinghouse system, with all its deep-seated inefficiencies.
In addition to getting a feel for the tech itself, the backers of the PoC will be exploring the commercial opportunities for such a solution. If it is to see wider adoption, it will require more financial players, including banks, to opt-in. With Argentina’s Central Bank now behind the project, it has the legitimacy it needs to succeed.