Earlier this week, the Central Bank of Bahrain announced a digital currency pilot with JP Morgan. The trial is for cross border US dollar supply chain payments and receipts with Bahrain’s Bank ABC. Going forward, the central bank said it would consider extending the collaboration to Central Bank Digital Currencies (CBDCs).
The pilot aims “to develop a more efficient payments infrastructure, focused on addressing the current limitations in cross-border payments,” said Sael Al Waary, deputy CEO of Bank ABC. “We envisage major changes across the world with digital currencies, which will play a critical role in enabling the future digital economies.”
Digital currency payments are usually point to point (P2P), removing intermediaries. Both sides of a transaction will either fail or succeed, which avoids the issue of money being left in limbo while AML or other queries are resolved.
The settlement solution is part of JP Morgan’s Onyx blockchain division. Onyx is also involved with Singapore in an interbank settlement platform, Partior, that uses blockchain and digital currencies. DBS Bank and Temasek are partners in that project.
Apart from tokenizing money, Onyx also has its Liink (formerly IIN) blockchain solution, which helps to prevent and address holdups in more conventional payment messaging systems and boasts more than 400 members banks. Bank ABC and the Central Bank have been participants in Liink for some time, with Bank ABC one of the first to join in 2018.