Japanese banks have formed a consortium to experiment with fund transfers using digital currencies that aims to develop more convenient, lower-cost alternative to wiring money, Nikkei reported.

The payments consortium is led by SBI Holdings and SBI Ripple Asia. The consortium has 56 members including recent additions MUFG unit Bank of Tokyo-Mitsubishi UFJ and Shiga Bank.

The upcoming test using the digital currency is designed to examine the time, cost and convenience of money transfers. Also, creation of a new virtual currency is being considered that can be used only by the financial institutions taking part in the test.

The test will see participation from only some of the members of the consortium such as Mizuho Financial Group, Resona Holdings' Resona Bank and Concordia Financial Group's Bank of Yokohama.

Nikkei reports stated that the test’s main goal is to determine whether a virtual-currency-based system can be used to offer 24-hour fund transfer services and whether it can lower costs for banks. The present traditional model include banks using a system run by the Japanese Bankers Association for domestic money transfers.

The money transfers will utilize blockchain technology, but the actual type of system that is to be used is yet to be decided.

The consortium has also planned to test digital currency-based international fund transfers and hopes that blockchain potential can lower the costs when compared with SWIFT, the global payments network.