After the enterprise blockchain consortium began version 1.0 of Corda back in October, the bank has turned around on its initial stance and said that it’s prepared to see if the updated version has what it takes to back up elements of the country’s financial infrastructure.
And with that change, Banco Central do Brasil is now working on proofs-of-concept (PoCs) on four different platforms, trialing ethereum, JPMorgan’s Quorum and Hyperledger Fabric apart from its work on Corda.
The PoCs generally focus on utilizing blockchain to both support the central bank’s current real-time gross settlement system (RTGS), called the Brazilian Payment System, and improve alignment in the organization with the growing momentum for central banks to be up-to-date using blockchain technology.
Aristides Andrade Cavalcante Neto, the Deputy head of the central bank’s IT department, said, “We are a central bank, and we enjoy a lot of stability. But you have to think change. You have to think of a different business model. So, for us, that’s the most difficult part of this kind of work when we’re talking about innovation.”
While the blockchain team at Brazil’s central bank had contemplated a number of use cases – including allowing foreign trade in local currencies and an identity management system – back in January, it eventually focused on RTGS, said the team’s analyst Jose Deodoro De Oliveira Filho.
Instead of being netted intermittently, RTGS is used to permit banks to settle their large-value debits in real time. Since these transactions are occasional, they have been identified by multiple central banks as a potential use case for blockchain.
Banco Central do Brasil goes through 314,000 transactions each day, moving around a total of 839 billion Brazilian reals, or about $255 billion in today’s exchange rate.
De Oliveira explained the decision to turn their attention on the RTGS use case, stating that while the central bank’s current system has been assisting commercial banks to resolve accounts for 15 years, they still don’t have a backup system. And they’re deliberating whether a blockchain is an answer.
According to De Oliveira, each of the platforms has its own “advantages and problems,” but only two main problems – albeit big ones – persist.
Specifically, the central bank can’t “prove” that applying a blockchain system would be less costly than using something more traditional, he said. And there are ongoing queries regarding the privacy of using a shared, distributed ledger.
“If you want privacy you can’t have the other features, and if you want the other features, you can’t have privacy. So, that’s what we’re trying to solve right now,” De Oliveira quipped.
But while RTGS is the primary emphasis of the central bank’s blockchain work, it’s also taking on a blockchain-based “information exchange.”
The exchange, dubbed Know Your Citizen, is driven by Quorom in Microsoft’s Azure cloud. It also uses Truffle, a popular ethereum development framework, to interact with smart contracts.
Details about the project are still under wraps, said De Oliveira but added that they would reveal more in the coming months.
