Global financial services firm JPMorgan continues to explore the benefits of blockchain, deploying the technology to remove some of the constraints of traditional finance.
The banking giant has partnered with six major Indian banks to launch a blockchain-based platform that will enable interbank settlements in US dollars, Bloomberg reported on June 5.
The participating banks include HDFC Bank, ICICI Bank, Axis Bank, Yes Bank, IndusInd Bank and the banking arm of JP Morgan in Gujarat International Fintech City or GIFT City. Kaustubh Kulkarni, a senior country official at JPMorgan, said the blockchain pro ject aims to expand the capacity of existing settlement systems. According to the executive, the platform will allow banks to process instant transactions 24 hours a day, 7 days a week. Under the current interbank settlement system, transactions can take up to several hours. Also, settlement services are not available on Saturdays, Sundays or public holidays. Kulkarni claimed that JPMorgan's blockchain pilot would remove this hurdle, noting:
"By leveraging blockchain technology to facilitate transactions 24x7, processing is instant and enables GIFT City Bank to support their own time zones and business hours." The initiative also aims to help New Delhi position GIFT City as an alternative trade hub to Sing apore and dubai, the report noted.
According to Kulkarni, JPMorgan will run a pilot program in the coming months to analyze the bank's experience. Following approval from the International Financial Services Center Authority, the pilot will launch on Monday using JPMorgan's blockchain platform Onyx. As previously reported, JPMorgan launched the Onyx blockchain-based platform in 2020 with the aim of improving the quality of wholesale payment transactions. The bank reportedly processed nearly $700 billion in short-term loan transactions through Onyx through April 2023.
The news comes as JPMorgan currency strategists point to some emerging signs of de-dollarisation. "De-dollarization is evident in FX [foreign exchange] reserves, where the dollar's share in exports has fallen to record levels, but is still emerging in commod ities, " the strategists said.
