HSBC And IBM have designed and tested interoperable multi-ledger Central Bank Digital Currencies (CBDCs), securities, and FX settlement capabilities amid the CBDC pilot led by the French central bank.
The latest accomplishment demonstrated that a token-based FX settlement approach may be used for wholesale and retail use cases as the consortium successfully executed transactions that were cross-border, cross-CBDC and digital currency, cross-asset, cross ledger, end-to-end securities and foreign exchange.
The direct transactions between two central bank digital currencies (CBDC) in a hybrid cloud environment tested the token and digital wallet settlement capabilities.
Designed and implemented within a four-month period, the test supported a complex multi-asset transactional scenario, a milestone for the trading industry as previous initiatives have only individually demonstrated support for CDBCs, securities and/or foreign exchange.
Mark Williamson, Managing Director GFX eRisk, Partnerships & Propositions at HSBC, said: “We were pleased to be selected by Banque de France to conduct this exciting experiment. Our collaboration with IBM on this initiative has resulted in this milestone of streamlining front-to-back securities and foreign exchange DVP and PVP settlement processes. Interoperability across different DLT’s and technologies was key is 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.”
Likhit Wagle, General Manager Global Banking & Financial Markets at IBM, commented: “Our collaboration with HSBC, a leader in foreign exchange trading, and Banque de France, a pioneer in the use of central bank digital currency, to create a foreign exchange settlement capability that has the potential to reduce costs and improves security, is an important accomplishment that stands to benefit the global financial services industry broadly. As central banks around the world begin to explore the potential for CBDC to bring greater transparency and security to financial transactions, this initiative provides a comprehensive roadmap.”
HSBC and IBM have together successfully tested:
– an end-to-end transactional lifecycle covering CBDCs (minting and allocation),
– eBonds (Delivery Versus Payment (DVP) across primary issuance and secondary trading and coupon payments),
– foreign exchange (pricing and Payment Versus Payment (PVP) settlement).
Distributed ledgers based on IBM’s Hyperledger Fabric and R3’s Corda were integrated using IBM Research’s Weaver interoperability tool.
Banque de France has been commissioning pilots for CBDCs as part of a multi-pronged program to explore the potential of the digital Euro.