HSBC And IBM Successfully Design And Test Interoperable Multi-Ledger Central Bank Digital Currency, Securities And Foreign Exchange Settlement Capability

Rhea-AI Summary

HSBC and IBM have successfully tested a digital wallet settlement capability for direct transactions between central bank digital currencies (CBDC) in a hybrid cloud environment. This four-month experiment executed a comprehensive transactional lifecycle involving CBDCs, eBonds, and foreign exchange settlements. Initiated by Banque de France, the project highlights interoperability across ledgers using IBM's Hyperledger Fabric and R3's Corda, aiming to enhance efficiency, security, and cost-effectiveness in financial transactions, benefiting the global financial services industry.

Positive

• Successfully tested multi-asset transactional scenarios involving CBDC, eBonds, and foreign exchange.
• Demonstrated interoperability across different distributed ledger technologies to streamline processes.
• Enhancements in security, efficiency, and cost reduction in transactions between central banks and commercial banks.

Negative

• None.

LONDON and NEW YORK, Dec. 16, 2021 /PRNewswire/ -- HSBC and IBM (NYSE: IBM) today announced the successful test of an advanced token and digital wallet settlement capability encompassing direct transactions between two central bank digital currencies (CBDC) in a hybrid cloud environment.

Several previous initiatives have individually demonstrated support for CDBCs, securities and/or foreign exchange. The experiment, which was designed and implemented within a four-month period, successfully executed across ledgers in support of such a complex multi-asset transactional scenario.

The experiment successfully tested an end-to-end transactional lifecycle covering CBDCs (minting and allocation), eBonds (Delivery Versus Payment (DVP) across primary issuance and secondary trading and coupon payments), and foreign exchange (pricing and Payment Versus Payment (PVP) settlement). It was conducted in a hybrid cloud environment incorporating public and private clouds and on premise data sources. Distributed ledgers based on IBM's Hyperledger Fabric and R3's Corda were integrated using IBM Research's Weaver interoperability tool.

The project was initiated by Banque de France - a leader among central banks in its breadth of CDBC experimentation - as part of a multi-pronged program to explore the potential of the digital Euro. HSBC, one of the world's largest foreign exchange banks, and IBM, a leading provider of consulting services and technology to the financial services industry, were chosen from a diverse field of highly-regarded financial and technology applicants.

Mark Williamson, Managing Director GFX eRisk, Partnerships & Propositions at HSBC, said: "We were pleased to be selected by Banque de France to conduct this exciting experiment. Our collaboration with IBM on this initiative has resulted in this milestone of streamlining front-to-back securities and foreign exchange DVP and PVP settlement processes. Interoperability across different DLT's and technologies was key is demonstrating how to save time, reduce market risk and improve security for transactions between central banks, commercial banks and in time our clients around the world."

"Our collaboration with HSBC, a leader in foreign exchange trading, and Banque de France, a pioneer in the use of central bank digital currency, to create a foreign exchange settlement capability that has the potential to reduce costs and improves security, is an important accomplishment that stands to benefit the global financial services industry broadly," said Likhit Wagle, General Manager Global Banking & Financial Markets at IBM. "As central banks around the world begin to explore the potential for CBDC to bring greater transparency and security to financial transactions, this initiative provides a comprehensive roadmap."

Media contacts

HSBC
Paul Smith
+44 20 7991 4867 / 07467 444817
Paul.a.smith@hsbc.com

IBM
Mary Ellen Higgins
+1 781.789.1911
maryellen.higgins@ibm.com

HSBC Holdings plc
HSBC Holdings plc, the parent company of HSBC, is headquartered in London. HSBC serves customers worldwide from offices in 64 countries and territories in its geographical regions: Europe, Asia, North America, Latin America, and Middle East and North Africa.  With assets of $2,969bn at 30 September 2021, HSBC is one of the world's largest banking and financial services organisations.

IBM
To learn more about IBM's insights and solutions, visit www.ibm.com/financial-services.

View original content:https://www.prnewswire.com/news-releases/hsbc-and-ibm-successfully-design-and-test-interoperable-multi-ledger-central-bank-digital-currency-securities-and-foreign-exchange-settlement-capability-301446729.html

SOURCE IBM

FAQ

What recent development involves IBM and CBDCs?

HSBC and IBM announced a successful test of a digital wallet for transactions between CBDCs.

What was the goal of the HSBC and IBM experiment?

The experiment aimed to streamline settlement processes for securities and foreign exchange using CBDCs.

When was the HSBC and IBM CBDC project announced?

The project was announced on December 16, 2021.

What technologies were integrated in the HSBC and IBM CBDC initiative?

The project integrated IBM's Hyperledger Fabric and R3's Corda using IBM Research's Weaver tool.

What potential benefits does the IBM and HSBC CBDC project offer?

The initiative aims to reduce costs, improve security, and enhance efficiency in financial transactions.