Final Stages of Testing in the Works for CLS Blockchain Payment Service
In a report on July 27th, CLS, an FX settlement company, is presently in the process of finalizing their new payment service, which will cater to the needs of banks. The services are supposed to be launched before the end of the summer, and seven banks already are tied to the system for these early stages.
CLS is based out of New York and is known as a cash settlement system that works around the world with different currencies. This project has brought together CLS and IBM to create a payment netting service that validates transactions on a blockchain. The goal is for banks to integrate blockchain to the IT systems, which will increase standardization and relieve the bank of many costs.
Right now, there is a lack of standardization among forex institutions, because they currently have to handle each process manually. Unfortunately, this leads to many different approaches to the netting process and ends up costing the banks more in the long run.
For members of the CLS service, they will have two different options to connect with the CLSNet Service, which is directly and through the SWIFT financial messaging provider. For better clarification, a spokesperson for the company said that the first stage would require the client to rely on the SWIFT provider. However, direct node hosting is planned to be available when “the service continues to grow with functionality and client adoption, and the DLT [distributed ledger technology] matures.”
The seven banks that are already tied in are only a portion of the total banks that backed the project. However, some of the bigger banks are resistant to get involved, because the technology is still in the testing stages, according to CL chief strategy and development officer Alan Marquard. Marquard also said it is not possible for banks to “just install a piece of software,” because they need to start by building “operational knowledge and know-how,” which preserves the database’s privacy.
CLS Group was originally called the Continuous Linked Settlement, and they have managed to work with Goldman Sachs, Barclays, Citigroup, and JPMorgan. Only a few months ago, they used a $5 million investment to work with other experts in the blockchain industry.
SWIFT has 45 years of experience in their field, supporting financial institution by organizing transaction details. They announced their new blockchain pilot, which evolved into a Hyperledger-based project and was released in 2017.
In June, the chief cryptographer of Ripple, David Schwartz, said that banks were not even likely to use blockchain for international payments. His reasons included processing the lack of scalability and privacy issues.