Japanese banking consortium members test 24-hour fund transfers using cryptocurrencies, intends to develop new bank cryptocurrencies

Members of a Japanese banking blockchain consortium are preparing to test a cryptocurrency-based funds transfer system.

According to Nikkei, Yokohama Bank, Mizuho Financial Group and Resona Bank are among the institutions taking part in a new trial.

The test is the latest development for the unnamed blockchain consortium, which was founded in early 2016 and is led by financial services firm SBI Holdings and a joint venture it has with distributed ledger startup Ripple.

More than 50 institutions are involved in this blockchain alliance and have previously tested Ripple technology applications.

According to Nikkei, the main purpose of the test is to determine whether blockchain technology can be used to provide 24-hour fund transfer services and reduce bank costs. Currently, Japanese banks use a system run by the Japan Bankers Association for domestic transfers. Domestic transfer services are generally only available from 8:30 a.m. to 3:30 p.m. Some estimates suggest that the maintenance cost of a system based on virtual currency is only one-tenth of the current system of the Japan Bankers Association. In addition, the banks are considering creating a new virtual currency or digital token to achieve this goal.

In addition, the media also reported that the scope of this test may go beyond domestic transfers.

The Nikkei News stated:

“The banking consortium is considering testing international funds transfers based on virtual currencies, a move it hopes will reduce costs compared with global payments network SWIFT.”

As previously reported by Babbitt, Japanese banking giant Mizuho Financial Group is close to completing a pilot project to use the Bitcoin blockchain for securities transfers. The bank is also particularly fond of Bitcoin and invested in Japan's largest Bitcoin exchange BitFlyer earlier this year.