The digital ledger technology hits keep coming this month as HSBC and IBM today announced they’ve successfully used distributed ledger technology to conduct wholesale central bank digital currency (CBDC) transactions, including foreign exchange settlements and end-to-end securities transactions.
The initiative started in March as part of a program sponsored by Banque de France, the central bank of France. The bank launched trials for wholesales CBDC, which attracted eight participants, including $3 trillion HSBC. Banque de France chose HSBC and IBM Consulting to conduct the experiment.
IBM Consulting and HSBC designed the distributed ledger-based foreign exchange (FX) settlement process in just four months, and the first transactions were settled successfully Dec. 14. The transactions were conducted in a hybrid cloud environment incorporating public and private clouds and on-premise data sources, IBM said in its announcement.
The distributed ledgers based on IBM’s Hyperledger Fabric, a distributed ledger platform, and R3’s Corda, a peer-to-peer distributed ledger technology platform, were integrated using IBM Research’s Weaver interoperability tool. Weaver is an open-source architectural framework.
IBM reported the experiment successfully tested:
- An end-to-end transactional lifecycle covering CBDCs, including minting and allocation;
- eBonds, delivery-versus-payment settlements, across primary issuance and secondary trading and coupon payments;
- Foreign exchange pricing, and payment-versus-payment (PVP) settlements.
Interoperability across different distributed ledger and technologies was key to “demonstrating how to save time, reduce market risk and improve security for transactions between central banks, commercial banks and in time our clients around the world,” said Mark Williamson, managing director GFX eRisk, partnerships and propositions at HSBC, in the announcement.
Meanwhile, HSBC also revealed earlier this week that it had completed a PVP foreign exchange trade settlement with $1.9 trillion Wells Fargo. The settlement used distributed ledger technology from Baton Systems’s Baton Core-FX platform as part of the solution.
And last week, the $3.9 trillion State Street revealed it had used blockchain and a smart contract to automate the collateral settlement on a margin calculation process for a live trade of a 30-day foreign exchange (FX) forward contract with Vanguard.
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Author: Loraine Lawson