Today Wells Fargo and HSBC announced they’ve agreed to settle foreign exchange (FX) transactions in several major currencies using a blockchain platform. The banks will settle bilateral transactions starting with USD, CAD, EUR and GBP with plans to extend the solution to other currencies. The platform will process around a hundred transactions a week in the early stages and gradually ramp up.
A key differentiator explored later is settlement using commercial bank money instead of central bank money, as happens with CLS.
In 2018, HSBC launched its FX Everywhere platform, which it initially used between banks within the HSBC group but it’s now extending with this partnership. To date, the solution has processed three million intrabank trades amounting to $2.5 trillion.
The offering enables real-time transparency and payment versus payment (PvP) net settlement to cut costs while limiting settlement risks. The banks can choose how many times a day to make net settlements between them.
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