Linux Foundation announces project to "advance blockchain technology"

Domestic bank transfers usually go through some kind of a central bank, so the speed and reliability of transfers completely depends on it. Some countries have good central banks (a typical transfer through the national bank in Ukraine takes _seconds_), other countries have extremely poorly implemented systems (USA, Germany).

Also, there are often certain legal requirements so banks have to maintain some kind of a minimum balance on their correspondent accounts in their national banks.

But international transfers are a whole different story (BIS actually has almost nothing to do with them directly). They go through correspondent accounts in different jurisdictions, sometimes through more than one intermediary. There's a typical transactional problem - all parties must agree to the transfer and then commit to it.

The problem is that traditionally SWIFT transfers are implemented exceedingly poor and require a lot of manual work in corner cases. And if a mistake happens, unwinding it often takes ridiculous amounts of time.

Blockchain can help with it, especially if banks can post their correspondent account amounts to the blockchain.

Correct that it is complicated, but the mechanism is not as described above. Note that my knowledge is 5 years out of date but progress in this sphere is glacial and for extremely good reasons - all banks globally have to be able to operate this system, whatever their technology level - even as few as 20 years ago, there were non-computerised banks.

Domestic transfers tend to go direct from bank to bank via a domestic messaging system that is overseen by the domestic central bank. This assumes that the sending bank and receiving bank have a pre-agreed 'correspondent relationship', which is often not the case in the USA due to its fragmented banking system, and therefore the payment must go via a third bank that both banks have a relationship with (and if they have no mutual relationship, then a 4th bank would have to be involved).

A correspondent relationship is where a bank operates a currency account on behalf of another bank, using a carefully agreed contractual process and often with manually face to face exchanged signing keys - note that the signing system was designed before public key encryption was widely available. A correspondent relationship is not often (even usually) not mutual. The bank and their correspondent bank reconcile their view of their accounts on varying frequencies - depending on the technology level of the bank. And separately reconcile the messages ordering payments into and out of the accounts.

Europe effectively has a continent wide domestic transfer system. International transfers usually go via the SWIFT messaging system and usually involve three banks in different roles. The usual roles are sender, sender's correspondent and receiver, but not infrequently, the sender's correspondent and the receiver are the same. When sending to USA, it there may need to be 4 banks involved as the sender's correspondent and the receiver may not have a correspondent relationship.

A blockchain ledger combined with public key encryption has the _potential_ to vastly simplify this process but only the potential. Various parties, not least the incumbent software suppliers, the messaging system operators and possibly even the smaller central banks and the largest governments have many incentives to resist any change.