Mumbai: J.P. Morgan, the largest bank by market capitalisation, has introduced a real-time interbank US dollar settlement pilot project in Gujarat International Finance Tec-City (GIFT City) through its blockchain platform, Onyx. The six banks that have joined the platform are Axis Bank, HDFC Bank, ICICI Bank, IndusInd Bank, JPMorgan Chase Bank’s Gift City branch, and Yes Bank.
The approval from the International Financial Services Center Authority (IFSCA) has paved the way for interbank US dollar transactions on the blockchain platform.
Speaking to TOI, Naveen Mallela, Managing Director and Head of Onyx Global Coin Systems at J.P. Morgan, said that developing a blockchain-based payments network aligns with GIFT City’s vision of becoming a global finance and IT hub.
“India has arguably the most advanced global payment infrastructure, and digital currency rails by Onyx is the next add-on to the infrastructure. The Onyx platform we have deployed operates like a 24X7 settlement network for not just the banks within the GIFT City but between the IBUs and other entities on the network globally,” said Mallela.
Onyx by J.P. Morgan, established in 2020, has been a frontrunner in blockchain-based platforms for wholesale payment transactions.
“The interbank dollar clearing pilot is only a small beginning. We see a future for the shared ledger platform as an alternative to existing cross-border payment systems. Onyx can act as a platform for all types of assets – CBDC, currency, or government securities that can be tokenized and transactions settled on a real-time basis without needing a central counterparty,” he said. The platform would also allow banks and corporates to do new transactions like intraday repo to meet temporary liquidity needs.
“Corporate clients would be able to move their money seamlessly. Post the Silicon Valley Bank demise, we have seen some Indian start-ups looking to transfer their funds to alternate accounts in Gift City,” said Mallela.
Injeti Srinivas, Chairperson of International Financial Services Centres Authority (IFSCA) the regulator for Gift City said that one of IFSCA’s goals is to incubate new financial technologies supported by a regulatory framework based on global best practices. “I look forward to the performance of this system that promises round-the-clock and instantaneous USD clearing and that will be piloted in IFSCA’s Regulatory sandbox,” he said.
At present, anyone wanting to participate in clearing and settling rupee-dollar transactions must open an overseas nostro account. Also such Nostro account-based clearing and settlement are unavailable on weekends and currency holidays.
The pilot project will establish a blockchain-based infrastructure that can support foreign exchange transactions and enable settlements for tokenized assets in the future.
https://m-timesofindia-com.cdn.ampproject.org/c/s/m.timesofindia.com/business/india-business/jp-morgan-launches-blockchain-platform-for-usd-clearing-in-gift-city/amp_articleshow/100763751.cms
