Wells Fargo Partners with HSBC to Settle Foreign Exchange Transactions Using Blockchain

Wells Fargo has in partnership with HSBC to use its blockchain tools for the settlement of bilateral foreign exchange (FX) transactions. ...



Wells Fargo has in partnership with HSBC to use its blockchain tools for the settlement of bilateral foreign exchange (FX) transactions.

Wells fargo would use the system developed by HSBC FX Everywhere Platform for interbank foreign exchange transactions. Developed by HSBC in 2018, the blockchain settlement platform is primarily used to settle transactions between banks in the HSBC group. The latest partnership would be the first use case outside of the HSBC group.

The partnership would make way for transactions to be settled in US dollars (USD), Canadian dollars (CAD), pounds sterling (GBP) and euros (EUR). The official press release said the platform will expand to include more currencies in the near future. The FX Everywhere platform has settled three million trades valued at $ 2.5 trillion to date.

Mark Williamson, Global Head of FX Partnerships and Proposals at HSBC, said:

“The platform allows participants to efficiently settle their bilateral cross-border obligations in multiple onshore and offshore currencies, coupled with the added flexibility of extended settlement windows to optimize PvP risk reduction opportunities. “

The use of blockchain technology for interbank settlement increases the efficiency of transactions and reduces the cost per transaction. During the early stages of the partnership, the platform would settle around 100 transactions each week and gradually increase the rate over time.

Related: Central Bank of Sri Lanka completes validation of its KYC platform

The use of decentralized technologies for bank settlements is nothing new. In recent years, some of the biggest names in banking have turned to blockchain technology to cross-border transfer and settlement.

While central banks seek to incorporate the use of CBDCs, private banks use money from commercial banks. A recent report of the Juniper Group has shown that cost savings for commercial banks using blockchain technology will increase by up to 3,330% by 2030.