The Central Bank of Bahrain (CBB) has announced it is collaborating with JP Morgan and Bank ABC in a pilot scheme to introduce instantaneous cross-border payment solutions with digital currency.
The decision comes as part of the CBB’s vision to improve the customer experience for safe and efficient settlement solutions and follows the new established trend of central banks experimenting with distributed ledger technology in order to eventually issue their central bank-backed digital currencies.
Bank ABC along with J.P. Morgan will pilot the transferring of funds from and to the Kingdom of Bahrain in US-Dollars for payments from buyers to suppliers.
This will lead to suppliers being paid faster and buyers originating payments in shorter time periods without the need for holding funds in advance.
The Central Bank of Bahrain will act as a close partner in the pilot between Bank ABC and J.P. Morgan and going forward would look to extend the collaboration to Central Bank Digital Currencies (CBDCs).
H.E. Rasheed Al-Maraj, Governor of the Central Bank of Bahrain, said: “We at the Central Bank of Bahrain are extremely pleased to announce this collaboration which is in line with our vision and strategy to continually develop and enrich the capabilities extended to the stakeholders within our financial services sector in the Kingdom using emerging technologies. Through this pilot with J.P Morgan and Bank ABC, we aspire to address the inefficiencies and pain-points which exist today in the traditional cross-border payments arena”.
Sael Al Waary, Deputy CEO of Bank ABC, added: “We are excited to collaborate with the CBB and JP Morgan in this landmark pilot, to develop a more efficient payments infrastructure, focused on addressing the current limitations in cross-border payments. We envisage major changes across the world with digital currencies, which will play a critical role in enabling the future digital economies.”
Ali Moosa, Vice Chairman of Wholesale Payments at J.P Morgan, stated: “J.P. Morgan ONYX has been setup with the mandate to lead the buildout of next generation clearing and settlement infrastructures and we are delighted to partner with a leading central bank and regulator like the CBB and an innovation-focused partner like Bank ABC to lead the buildout of a next generation payment and settlement infrastructure”.
It was most recently announced that J.P. Morgan will be the first of Baton’s clients to manage their collateral at LCH using the Baton platform, whose shared permissioned ledger integrates with existing collateral and cash systems of external providers, including CCPs and custodians.
Baton Systems has integrated with LCH to automate the end-to-end collateral workflow for derivatives participants, with the partnership expanding its network of central counterparties (CCPs).
Baton normalizes and harmonizes data and collateral workflows for all integrated CCPs to enable access to consolidated intra-day information in a single dashboard, with true visibility into the full collateral lifecycle.
This includes visibility of margin requirements, a standardized process for pledging and recalling collateral, and real-time visibility and accelerated movement of asset movements at external custody banks and CCPs.