The blockchain sector was in the headlines recently, with Wells Fargo and HSBC announcing to use of the technology. The two banks have started using blockchain technology to settle transactions directly.
In addition, the institutions will reconcile and pay off deals in sterling, dollars, Canadian dollars, and euros. Furthermore, the deal will see the banks utilizing HSBC’s FX Everywhere platform. Moreover, the agreement will allow the banks to bypass CLS, the almost 20 years-old utility that central banks and institutions urge market participants to mitigate risks of certain trading failures.
The latest development is another example of how blockchain technology is entering the 6.6 trillion dollars-per-day foreign currency industry. The technology will start resettling relationships between central and investment banks with the announcement.
Earlier in December, the central banks of France and Switzerland also tested the first-ever cross-border payment on the blockchain. The trade emerged as part of projects’ series around central bank virtual currencies.
Mark Jones, Wells Fargo’s Co-Head of Macro, also talked about the integration. According to Jones, this would be the very first-time blockchain has been utilized to conclude real-time cross-border transactions. In addition, Wells Fargo believes this to be one of the first among many to use transformative technology across the market in the upcoming years.
Mark Williamson, HSBC’s global head of FX partnerships, stated that the central banks were interacting with financial industry infrastructure operators about potential involvement. The head did not reveal any names; however, he stated that the decision would be taken in the coming year.
Using blockchain technology will allow Wells and HSBC to possess real-time transparency within foreign exchange trades’ settlements in four initial currencies.