Russian based Financial institution Sberbank and equity firm Interros Group have carried out over the counter OTC foreign exchange repurchase agreement (repo) employing smart contract on a blockchain.
Partnership On Blockchain
The monumental agreement between the two institutions will help to strengthen the use of blockchain technology in the cooperate world. Commenting on the latest development, head of global markets department and vice president of Sberbank Andrei Shemetov stated that the transaction is real, legally binding and was concluded using smart contract and digital signatures through the IT platform of Sberbank.
Though Shemtov did not reveal the nitty-gritty of the transaction, he, however “indicated that the amount corresponded to the average volume of the interdealer repo transaction.” He revealed further that the “transaction is a currency repo secured by the pledge of Eurobonds of the Russian issuer of the first tier.”
Shemetov also revealed the way in which blockchain technology will improve the services rendered by Sberbank. He said:
“In the long term, the conclusion of transactions, through the blockchain platform will reduce transaction costs and error through automation, as well as increase transparency and trust among all participants in the financial market.”
Multifaceted Nature of the Blockchain Technology
The agreement will open a new chapter in the way the blockchain technology is being used. Shermetov was quoted as telling Reuters about “the creation of a software environment with the ability to audit data on a bilateral basis” and “automation of settlement and operational functions” as advantages of blockchain-based repo transactions.
Interros Group is a Moscow based private equity firm, founded by Vladmir Potanin in 1990, with vested interest in many industries, which cuts across the financial industry, pharmaceutical industry, and other profitable ventures. The firm has stakes in Norilsk Nickel, ski resort development firm Rosa Khutor and pharmaceutical company Petrovax Pharm.
Blockchain technology has been regarded as the next best thing after the internet and electricity and its believed in many quarters as the shining light of the cryptocurrency community. The multifaceted nature of the technology means that it can be used in many ways, depending on how it is programmed and directed to work.
Blockchain enthusiasts have predicted that the technology will be used heavily in the industrial scale in the next two years and will gradually penetrate every major sector in the next three to five years.