BERLIN, May 24 (Reuters) - Commerzbank and Thyssenkrupp have replicated a foreign exchange transaction using blockchain, the first such deal involving a large German company which proponents say could make doing business cheaper and quicker.
The use of blockchain, a transaction ledger that underpins virtual currency bitcoin, could help reduce delays and manual errors, Commerzbank said on Thursday.
It will eliminate the need for transaction reconciliation, because the transaction is stored as a single immutable record.
Reconciliation is a major issue for banks when trading forex, Commerzbank manager Nikolaus Giesbert said.
“Significant resources are dedicated to resolving the issues that occur during the matching process. This deal demonstrates how the use of distributed ledger (blockchain) can transform and digitalise the processes in this space,” he said in a statement.
The EUR/PLN FX Forward deal, which amounted to 500,000 euros with a one month tenor, was initiated by Thyssenkrupp on Wednesday using Commerzbank’s FX Live Trader platform.
The deal confirmation was sent to Thyssenkrupp directly via CORDA, a distributed ledger designed for finance by the R3 blockchain consortium.
However, Commerzbank said in order for the full efficiency benefits of using blockchain to be realised, technical, regulatory and legal requirements need to be further developed. (Reporting by Victoria Bryan; Editing by Mark Potter)