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The financial sector will be among the first to experience the power of blockchain technology over the coming years. Various projects are already underway, and it looks like MUFG is working on a Promissory Notes project with blockchain infrastructure provider Chain.
Also read: Using Blockchain to Authenticate University Diploma
Issuing And Transferring Promissory Notes
Rather than trying to disrupt the payments industry with distributed ledgers, some established financial players are looking at other aspects of their business model that could do with some innovation. For the Mitsubishi UFJ Financial Group [MUFG] Promissory Notes seem to hold a lot of promise, and they are keen on exploring if the blockchain would be applicable in this field of expertise.
A Promissory Note is a signed document holding a written promise to pay a particular amount of money to a specified recipient. Moreover, this transfer is to be initiated – and honored – at a predetermined date, or whenever the recipient demands it. In a way, this sounds like something a smart contract could solve, but MUFG is collaborating with Chain to see if there is another solution available.
Chain CEO Adam Ludwin told the media:
“We are thrilled to be working with MUFG, our first partner in Japan. The team at MUFG is innovating rapidly in the blockchain arena and it is our privilege to be supporting and powering their efforts with Chain’s platform.”
The plan is to create a proof-of-concept that will facilitate the issuance and transfer of Promissory Notes, using blockchain technology. Enterprises would be able to securely issue, redeem, sell, and transfer Promissory Notes through a digital medium. Using distributed ledgers should help increase client confidentiality and privacy while still providing the necessary transparency to auditors and regulators.
Some people might find it odd MUFG is looking at Chain for this type of platform, as the financial institution is part of the R3 CEV consortium. Just a few weeks ago, the bank announced their plans to create their very own digital currency, which would be usable for international money transfers. Moreover, MUFG Coin would be made accessible to bank customers through a mobile application.
But it seems MUFG looks at Promissory Notes as just the beginning of their blockchain exploration trip. Other areas are being explored as well, as distributed ledgers can help improve the market infrastructure and payments in Japan. Rumors are circulating other financial institutions are involved in this process as well, although no further details were revealed at the time of publication.
Source: Chain Blog
Header image courtesy of Four Broad Gate
