The Royal Bank of Scotland (RBS) has announced that it has built a Clearing and Settlement Mechanism (CSM) based on the Ethereum distributed ledger and smart contract platform.

Built by the Innovation Engineering team at RBS, the project ‘Emerald’ aimed to explore the creation of a Deferred Net Settlement (DNS) system like FasterPayments using distributed ledger technology. GFT Technologies helped RBS to performance test the application on Google’s Cloud Platform. The technical paper states:

“The test results evidenced a throughput of 100 payments per second, with 6 simulated banks, and a single trip mean time of 3 seconds and maximum time of 8 seconds. This is the level appropriate for a national level domestic payments system.”

RBS noted that although the Ethereum platform has not been aimed at this use case before, the results have been encouraging and called for more investigation to make this work at scale. It also said that a lot of the complexity in Ethereum is not needed in this private network use case.

Explaining the reason for choosing Ethereum, the bank said that it was chosen as it is one of the most established smart contract platforms that is live in the public domain.

“The developers liked the idea of the freedom of a smart contract platform, where the smart contract defines the functionality, over a specific product which is well suited to this application but has less inbuilt flexibility”, it said.

The RBS team said that Ethereum required some modifications to tune its focus from a hugely distributed, public system to a faster moving, private ledger aimed at speed and throughput. The modifications and setup specifics will now be used to take the project forward as an open source initiative. In conclusion, the paper said:

“In summary, with some modification, Ethereum can scale to payment volumes consistent with a domestic payment system. There are some more avenues to investigate that would lead to it supporting much higher volumes. There are other technologies that might be considered too.”