Enterprise software firm R3, along with 22 of its consortium member banks, has developed a distributed ledger technology (DLT)-based solution that would enable fast, efficient and cost-effective cross-border payments, IBTimes UK reported.

The participating member banks include include Barclays, BBVA, CIBC, Commerzbank, DNB, HSBC, Intesa, KBC, KB Kookmin Bank, KEB Hana Bank, Natixis, Shinhan Bank, TD Bank, U.S. Bank, and Woori Bank.

Built on R3’s Corda platform, the solution creates a representation of fiat currencies on ledger and has been designed to ensure compatibility with central bank digital currencies when they are launched.

Existing payment systems in international trade face a number of challenges including the time taken to complete a payment, which costs businesses billions of dollars, slows trade, increases settlement and fraud risks and pressurizes banks’ resources. By facilitating instant international payments, the solution will help make world trade more efficient.

"International payments systems have struggled to keep pace with the explosion of global trade and the globalisation of the world's markets. This marks a significant milestone for distributed ledger technology as we work alongside our bank members to harness its unique attributes to build the world's first true international payments system. This solution will be a game-changer for any bank or company whose business relies on making or receiving cross-order payments, and is a key part of R3's wider strategy to leverage distributed ledger technology for faster and more efficient execution of all types of financial transaction,” David E. Rutter, CEO of R3, said.

The international payments prototype will be rolled out by the end of this year.