HSBC And Other Big Banks in the US Will Use Blockchain for Interbank FX Settlements
Banks have been among the most vocal opponents of the blockchain and cryptocurrency industries, despite the fact that the latter has only grown. “If you can’t beat them, join them,” as the phrase goes, and that is exactly what banks have done.
Blockchain technology have shown to be particularly beneficial to the banking and payments industries, necessitating the necessity for these businesses to change or be driven out. Banks have begun to cautiously but steadily adopt blockchain technology through different connections, recognizing its utility. The technology has been used by both large and small banks to enhance their present processes.
On Monday, major banks HSBC and Wells Fargo revealed plans to use blockchain to simplify interbank currency transactions. They want to do so using HSBC’s FX Everywhere technology, which was established three years ago in 2018. Using the technology, both institutions will be able to settle multi-currency FX transactions.
Previously, HSBC utilized FX Everywhere for intrabank FX transactions within its own banking system, but it is now expanding this service to include other banks. Wells Fargo is the first bank to join up for this service, as HSBC expands its presence to include other banks in the ecosystem.
FX Everywhere employs real-time transparency and payment facilitated by the blockchain instead of payment (PvP) net settlement. This technique helps to save money by lowering transaction costs and reducing the settlement risks that are frequently connected with FX transactions.
Mark Williamson, Global Head of FX Partnerships & Propositions at HSBC, commented on the partnership:
“The platform enables participants to efficiently settle bilateral cross border obligations across multiple onshore and offshore currencies, coupled with the added flexibility of extended settlement windows to optimize PvP risk reduction opportunities.”
Banks are not the only ones making changes to guarantee they are ready for the future. Visa and Mastercard have also increased their blockchain connectivity for their payment systems.