Dollar payments in India are usually made by holding Nostro accounts at U.S.-based banks. In India’s GIFT City, an international financial center, JP Morgan’s recently created branch has been given the green light for a pilot to act as an international settlement bank for other GIFT City banks. In a month or so, banks will be able to have foreign currency accounts with JP Morgan in India as blockchain-based bank accounts, enabling 24/7 settlement instead of being restricted to U.S. opening hours, according to the Economic Times.
GIFT City Gujarat aims to compete with other major international financial centers such as Singapore, Hong Kong, Abu Dhabi Global Market (ADGM) and Dubai’s IFC. Hence it is considered a quasi foreign territory with regulations that differ from the rest of India. Apart from hosting branches of various Indian banks, last year several international systemic banks opened up shop in the center, including JP Morgan, Deutsche Bank and MUFG.
JP Morgan will operate a sandbox environment enabling these banks to open on-chain Nostro accounts. While the interfaces use standard SWIFT messages, the ability to support instant settlement and 24/7 payments is because the payments are being processed using distributed ledger within JP Morgan’s ecosystem.
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