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Rabobank<\/a>\u00a0used blockchain to issue \u20ac40 million in one-week maturity euro commercial paper across 19 pilot transactions.\u00a0<\/p>\n With rising interest rates, blockchain is coming to the fore to empower shorter settlement times, enabling intraday transactions and hence improving liquidity.<\/p>\n The commercial paper, denominated in euros and pounds, was issued by the Dutch State Treasury, Rabobank Treasury and Austria\u2019s Erste Bank, with Northern Trust Asset Management as the investor.<\/p>\n Rather than taking two days, the issuance, distribution and settlement took under 30 minutes and cost less than the conventional process. Liquidity was enabled on both the primary and secondary markets.<\/p>\n \u201cBlockchain\u2019s reputation as a technology with legitimate applications for global financial markets has undoubtedly been shaken by the turmoil surrounding cryptocurrencies,\u201d said Roland van der Vorst, Global Head of Wholesale & Rural Innovation at Rabobank.\u00a0<\/p>\n \u201cThe scale and success of our pilot, delivered in partnership with some of the biggest financial institutions in Europe, will hopefully help to address misconceptions and show the revolutionary impact innovation in this space can truly have.\u201d<\/p>\n Rabobank developed the platform based on R3\u2019s enterprise blockchain Corda, which was also used in\u00a0pilots last year<\/a>.\u00a0<\/p>\n However, the commercial paper is not blockchain native. It is a conventional security that is issued in Euroclear Bank\u2019s infrastructure with the primary difference that it settles instantly.<\/p>\n The solution is integrated with legacy systems, including for risk, with the Netherlands Authority for Financial Markets having access to the blockchain for supervision.\u00a0<\/p>\n \u201cWe believe the digitisation of money markets can enhance liquidity and transparency at a critical time for the asset management industry. Our 2021 pilot was all about proof of concept,\u201d said Youssef el Mir, Global Head of Trading at Rabobank.\u00a0<\/p>\n \u201cThese latest transactions and the solution we\u2019ve worked collaboratively to deliver prove that blockchain technology can be smoothly and seamlessly integrated in financial institutions\u2019 legacy systems with the right approach.\u201d<\/p>\n Commercial paper is one tool for short-term banking liquidity with others including repo and trading liquid securities.\u00a0JP Morgan<\/a>\u00a0and\u00a0Broadridge<\/a>\u00a0are using blockchain for separate intraday repo solutions.\u00a0HQLAX<\/a>\u00a0uses distributed ledger to enable assets to be traded intraday that would usually take two days to settle. And\u00a0Finteum<\/a>\u00a0is a start-up that plans to launch intraday FX swaps and repo.<\/p>\n
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