VTB, Russia’s second-largest bank, has piloted a new blockchain-based system to issue bank guarantees.
It has been reported that VTB provided a blockchain-enabled bank guarantee to the country’s largest mobile cellular network provider, MTS.
However, as part of the development, the bank issued MTS a guarantee for the fulfillment of payment obligations worth 392 million rubles, or $5 million.
The commercial operation implemented Masterchain, an Ethereum-based blockchain prototype backed by the Russian central bank. The parties completed the transaction in real-time, with VTB issuing a digital guarantee signed with a reinforced qualified signature. Then, MTS accepted the document, sending a corresponding notification to the bank.
Vadim Kulik, the Deputy President and Chairman of the VTB management board, said that the new integration allows the bank to speed up the process of issuance guarantees and significantly reduces paperwork.
He noted that blockchain deployment also eliminates the risks of fraud associated with bank guarantees.
Likewise, Alexander Smirnov, the Director of Corporate Finance at MTS, emphasized that the Masterchain-based bank guarantees system will also reduce operational costs and increase competition among participating banks.
Thus, VTB’s move to introduce blockchain-based guarantees comes amidst a number of major Russian banks actively exploring blockchain technology.