Wells Fargo and HSBC to Use Blockchain for Interbank Currency Settlement

Wells Fargo and HSBC Bank have revealed plans to use a blockchain platform to clear and settle foreign exchange (FX) transactions.

Banks will settle bilateral transactions using a shared settlement system to process transactions in USD, CAD, GBP and EUR with the intention of using the platform to settle other currencies in the future. . The platform will initially carry out around 100 transactions per week and gradually increase the number of transactions over time.

The agreement allows both parties to use transparency and net payment-to-payment (PvP) settlement, thereby reducing settlement costs and risks.

Notably, the shared settlement system offers both companies faster settlement time and efficiency as it takes advantage of blockchain technology. They will also work within agreed guidelines to ensure an effective PvP net settlement.

It also allows the two banks to clear bilateral payment commitments and settle payments as agreed. This can be done multiple times a day, as the payment windows created by technology allow.

Mark Jones, co-head of macro at Wells Fargo Corporate & Investment Bank, said they were “extremely excited” to be using blockchain technology for the first time in the cross-border payment settlement process.

“We are extremely pleased to be working with HSBC on a project that places the two organizations at the forefront of blockchain innovation. We believe this will be the first step in the use of many processing technologies in our industry in the years to come, ”he said.

Leverage the HSBC FX Everywhere platform

The new initiative is based on the FX Everywhere platform, launched by HSBC in 2018. The platform settled more than three million foreign exchange transactions in 2019, worth approximately $ 2.5 trillion.

Based on the success achieved so far, the two banks intend to expand the system to include more participants and introduce a central financial market infrastructure provider (IMF) to administer the settlement of the platform. -form.

“As Financial Services continues to digitize the payment and value store on the blockchain, we are excited to work with Wells Fargo in the adoption of this important cross-border digital backbone for the confirmation and settlement of foreign exchange transactions,” said Mark Williamson, global head of FX partnerships and proposals at HSBC.

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