HSBC, Wells Fargo Utilize Blockchain To Speed Up FX Transactions
Roughly a decade ago, blockchain and related technologies were thought to be novelties for tech enthusiasts, with no legitimate application in the mainstream. But thanks to the explosion in Bitcoin’s popularity, combined with public education on the possibilities of decentralized digital activity, both regular citizens and industry professionals are finally understanding blockchains true potential.
This week, blockchain made its way into the headlines yet again after HSBC and Wells Fargo representatives revealed the two companies would be using a blockchain platform to help complete foreign currency(FX) trades. According to a report by Blockworks, both companies will utilize a shared settlement ledger created by Baton Systems, which makes it possible to settle currency trades across borders. The ledger will support the conversion of four main currencies, the US dollar, the Canadian dollar, the British pound, and the Euro.
By using this new approach for foreign exchange trades, investors are no longer required to play by the same trading rules as previous systems. For instance, the distributed ledger enables involved parties to collaborate on when and how currency transactions can be made, instead of relying on predetermined trade rules for individual currencies. This system also enables investors to complete multiple settlements, and makes it possible to settle FX transactions in only a few minutes.
If this effort proves to be successful for HSBC and Wells Fargo, it is almost a guarantee other banks who conduct similar trades will adopt a similar approach to meet the needs of modern FX traders. At a minimum, this news is further evidence of blockchain’s legitimacy in the global economy, and shows business leaders are becoming eager to utilize it for a broader range of applications outside of crypto.
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Edited by Maurice Nagle
