The system, which uses a blockchain distributed ledger to give all parties access and insight into the clearing and settlement of financial transactions, is created to augment financial flows worldwide, at the same time as allowing financial institutions to choose the settlement network of their choice for the exchange of central bank-issued digital assets.
The blockchain has always been seen as a method to quicken (and cheapen) cross-borders payments, and now that movement - which includes a number of startups making moves privately - just got its highest profile advocate after IBM announced its own solution focus on banks.
The aim of the payments process is to speed up clearances and settlements on a single network in real time.
Bridget van Kralingen, senior vice president of IBM Industry Platforms, "With the guidance of some of the world's leading financial institutions, IBM is working to explore new ways to make payment networks more efficient and transparent so that banking can happen in real-time, even in the most remote parts of the world".
At present, it takes anywhere from few days to several weeks for global transactions to get processed by banks which can be really frustrating for businesses. Overall the existing global payment solutions are time consuming, costly and error-prone.
The three organisations say the system is being used b APFII members and is already processing live transactions in 12 currencies across Australia, New Zealand the United Kingdom and Pacific Island nations.
Rizwan Khalfan, EVP and Chief Digital and Payments Officer, TD Bank, said: "TD Bank is pleased to participate along with fellow banking leaders to observe how IBM Blockchain can support more secure and effective payments solutions".
The solution isn't just limited to the physical payments, either.
In an example to this IBM said; that farmer residing in Samoa may quickly be able to contract a buyer staying in Indonesia, and using the BlockChain it can record everything right from farmer's collateral to the payments to letters of credit. Initially, Stellar will provide the network and digital asset to facilitate settlements for cleared transactions.
IBM's VP of Blockchain, Jesse Lund told that it is an essential next step in the evolution of blockchain technology.
While majority of banking institutions don't believe in cryptocurrencies, they can still use blockchain technology for improving speed and security for cross-border transactions.
Starting early next year, IBM said it plans to invite numerous banks worldwide to join the network and help it expand.