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EU’s Free Trade Infrastructure Needs a Lift From Blockchain

EU’s Free Trade Infrastructure Needs A Lift From Blockchain

The European Parliament has published a document ‘Blockchain: a forward-looking trade policy,’ which continues to push forward the adoption of DLT in EU trade.

As a provisional resolution, the document sets out a scenario by which the free trade agreements (FTAs) currently enjoyed by member states could be used to bolster blockchain technology. The document states:

“EU FTAs have large untapped potential and have yet to be fully utilized. Blockchain has the potential to support the TSD agenda by providing trust in the provenance of raw materials and goods, transparent production processes and supply chains.”

Although no policy changes are suggested, the EU resolution does advocate a set of guidelines by which blockchain might provide industry, customs, and regulatory authorities with a degree of legal certainty. The resolution wants more clarification on how economic efficiency can be legally enhanced across Europe supply chain and infrastructure logistics. The document states:

“The EU has an opportunity to become a leading actor in the field of blockchain and international trade, and that it should be an influential actor in shaping its development globally, together with international partners.”

The resolution noted that FTAs in the EU was underutilized with only 67 percent of EU exporters and 90 percent of EU importers making use of the preferential tariffs. It emphasized that blockchain could help improve these trade policies.

Last month, the formation of  “Blockchain for Europe” association was revealed, naming Ripple, NEM, EMURGO/Cardano and Fetch.AI as founding members.

A Finextra press release describes the association as “the first credible attempt” to establish a “unified voice” for the European blockchain industry. It argues that policy debates are “fragmented – with inconsistent information from those outside the blockchain sector challenging consensus within it.”

The four members of Blockchain for Europe are taking it upon themselves to educate EU and member-state institutions on the “true nature and potential of the distributed ledger (DLT) and blockchain technology.” Like many of the associations before it, Blockchain for Europe echoes concerns with regards to regulations and desires to establish ones that promote innovation in the region.

Also, four major European banks recently used R3’s Corda platform to create a live transaction for their Euro Debt Solution.

The banks, Commerzbank, ING, Natixis, and Rabobank have adapted blockchain technology, according to a new Banking Tech report, by finding a solution to minimize operational costs and risks using R3. Corda is a distributed ledger platform that is the outcome of over two years of intense research and development by R3 and 80 of the world’s largest financial institutions.

This month seven EU member states signed their own declaration calling for the promotion of DLT’s use in the region. The declaration was co-signed by Malta, Italy, France, Cyprus, Portugal, Spain, and Greece.

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Four Major Euro Banks Collaborate to Use Corda R3 for Debt Solution

It’s been reported that four major European banks have used R3’s Corda platform to create a live transaction for their Euro Debt Solution.

The banks, Commerzbank, ING, Natixis, and Rabobank have adapted blockchain technology, according to a new Banking Tech report, by finding a solution to minimize operational costs and risks using R3. Corda is a distributed ledger platform that is the outcome of over two years of intense research and development by R3 and 80 of the world’s largest financial institutions.

The banks combined their individual strengths to develop the solution. Natixis as the issuer, Rabobank as the investor, while ING acts as both the dealer and escrow agent. Commerzbank, on the other hand, provides the pilot framework, software and distributed ledger network for the transaction which involved the issuance of a one-day maturity Euro Commercial Paper (ECP) worth EUR100,000 or more than $113,000. ING’s head of money market and central bank sales commented:

“This live trade lays the foundation for dealing ECP more efficiently and cost-effectively. It also marks the start of building an improved DLT platform that enables direct settlement and reduces operational risk and costs at the same time.”

Ripple’s XRP has become the banking system’s go-to transaction solution in the crypto sphere, but this use of the Corda platform demonstrates that Ripple has not got a complete stranglehold on the space for such payments.

R3 leads a consortium of more than 200 financial institutions in research and development of DLT usage in the financial system and other commercial sectors. Corda was designed for dealing with complex transactions and security and is expected to have many of the benefits of the blockchain. A new version of Corda was released earlier this year aimed specifically at businesses, called Corda Enterprise, it includes a blockchain applications firewall.

However, Ripple does appear to be growing from strength to strength following the company’s recent announcement that Japanese banking corporation Mitsubishi UFJ Financial Group (MUFJ) Inc has struck a partnership with Brazilian bank Banco Bradesco for a new Ripple-based cross-border payments system.

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