Global banking juggernaut Wells Fargo recently announced that they will be utilizing blockchain technology for the very first time in a collaboration with HSBC Bank plc to run the netting settlement of matched foreign exchange transactions by using a shared settlement ledger to process US dollar, Canadian dollar, British pound sterling and Euro transactions with plans for future expansion already in the works.
By Andrew Senior
December 15th, 2021
The decision by Wells Fargo to employ blockchain technology for cross border payments will optimize the settlement of foreign exchange (FX) transactions while reducing risk. Wells Fargo will employ Baton Systems’ blockchain inspired proprietary CORE distributed ledger technology for their new service.
By using blockchain technology, Wells Fargo will expand its services to allow users to easily settle bilateral cross border obligations across multiple currencies, while also adding flexible extended settlement windows to optimize Payment-vs-Payment risk reduction. The shared private ledger powered by blockchain technology will also rapidly increase the settlement speed and efficiency of transactions. By taking advantage of the benefits of blockchain technology, both banks will be able to supply users with real-time transparency of settlement status for matched FX transactions in various currencies.
The banks will be able to net bilateral payment obligations and settle on a pre-agreed cadence multiple times per day within the flexibility of the settlement windows enabled by this technology while building on HSBC’s FX Everywhere platform which has settled over three million trades worth over $2.5 trillion to date.
Mark Jones, co-head of macro at Wells Fargo Corporate & Investment Bank, recently commented that,
“We are now utilizing blockchain technology, and expect that trend to continue to grow. As it relates to the crypto ecosystem, it’s clearly evolving fast and we are paying close attention to how the regulatory structure unfolds around it.”
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