Ripple is one of those projects designed to bridge the gap between banking and blockchain. That is easier said than done, though. In fact, this solution may face serious opposition moving forward. Over in Australia, the central bank will create a new system to allow for instant bank transfers between different companies. This new venture will seemingly make blockchain-based solutions obsolete. Then again, a lot can happen between now and January 2018.
Australia is not necessarily known for its financial innovation. That being said, the Reserve Bank of Australia has made some interesting decisions. Their latest venture revolves around near-instant interbank transfers starting in January 2018. It is a rather bold move, all of a sudden, to say the least. Making electronic money transfers complete within one minute or less is a rather ambitious goal.
An Ambitious Goal for Banks in Australia
Then again, most people know interbank transactions never take days to complete. The majority of money is transferred digitally in the first place. It is a matter of updating databases, which is usually done automatically. However, the delays caused by these transfers result in more fees for financial institutions It seems that situation will now come to an end in Australia. Surprisingly, this initiative has the full backing of all national banks as of right now.
New Payments Platform chief executive Adrian Lovney states:
“We’re putting in place a new system which will sit alongside the old system which will make payments move instantly between bank accounts and that’ll happen 24-7, 365 [days]. The system that we’re using today is about 50 years old and it was designed around the principle of tape exchanges, and transactions were stored until a certain time and then physically those transactions moved in a batch to the receiver’s bank.”
This sudden change of heart is pretty interesting, to say the least. It also comes at an intriguing time in the world of finance. The settlement process of all national banks needs to be cut down tremendously. This will not necessarily result in lower costs for consumers, mind you. Still, it is good to see the country’s central bank focus on what matters the most right now. It will be interesting to see how this situation will play out in the country moving forward.
Header image courtesy of Shutterstock