Wells Fargo has partnered with HSBC to use its blockchain tools for the settlement of bilateral foreign exchange (FX) market transactions.
Wells Fargo would use the Everywhere forex trading platform developed by HSBC for interbank currency transactions. Developed by HSBC in 2018, the blockchain settlement platform is primarily used to settle transactions between banks within the HSBC group. The latest partnership would be the first use case outside of the HSBC group.
The partnership would lead to transactions in US dollars (USD), Canadian dollars (CAD), British pounds (GBP) and euros (EUR). The official press release said that the platform would expand to include more coins in the near future. The FX Everywhere platform has settled three million transactions to date worth $ 2.5 trillion.
Mark Williamson, Global Head of FX Partnerships and Proposals at HSBC, said:
“The platform enables participants to efficiently settle bilateral cross-border obligations in multiple domestic and foreign currencies, along 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 initial stages of the partnership, the platform would settle around 100 transactions each week and gradually increase the rate over time.
The use of decentralized technology for bank settlements is nothing new. In recent years, some of the biggest names in the banking industry have turned to blockchain technology for cross-border remittances and settlements.
While central banks seek to incorporate the use of CBDCs, private banks use money from commercial banks. A recent report from the Juniper group has shown that cost savings for commercial banks using blockchain technology will grow to 3,330% by 2030.