HSBC and IBM Conduct Successful CBDC Experiments on Cross Cloud Environment

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by Gladis Monteiro · 3 min read
HSBC and IBM Conduct Successful CBDC Experiments on Cross Cloud Environment
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HSBC and IBM worked through the designs and architecture of the distributed ledger in a span of four months.

In a groundbreaking experiment led by Banque de France, financial and technology leaders HSBC and IBM respectively achieved direct ledger interoperability and conducted a host of effective transactions across digital assets and currencies. As part of the trial, cross-border, cross-asset, security-based, cross ledger, foreign exchange, cross-CBDC & digital currency transactions were tested.  Announcing the testing of its advanced token and digital wallet settlement capability, the report also spoke about the benefits of bringing such competencies into the mainstream. With more and more central banks testing CBDC capabilities, digital currencies are going to be the next big thing in the global financial ecosystem.

HSBC and IBM Creating a New Benchmark in Digital Transactions

HSBC and IBM worked through the designs and architecture of the distributed ledger in a span of four months revealing their highly sophisticated systems in place. The distributed ledger technology was operated with the help of IBM’s Hyperledger Fabric and R3’s Corda, which were integrated using IBM Research’s Weaver interoperability tool. The experiment involved merging a hybrid environment of public, private clouds with on-premises data.

The experiment tested several capabilities ranging from CBDCs’ end-to-end transactional lifecycle, payment-versus-payment (PVP) and foreign exchange pricing to eBonds and delivery-versus-payment settlements. Mark Williamson, HSBC’s managing director GFX eRisk, partnerships and propositions stressed the role of such high-tech capabilities in saving time, lowering market risks and enabling secure transactions between all financial institutions and in time between individual clients. This experiment is important in the backdrop of the global financial services industry that is exploring the potential of CBDCs in bringing about greater financial autonomy and transparency.

This distributed ledger technology-based experiment was part of a Banque de France-led program meant to identify the possibility and benefits of digital Euro. The leaders HSBC and IBM were chosen from a group of 8 participants comprising reputed financial and technology firms. Banque de France oversaw the project from the beginning in its pursuit of implementing the digital Euro. Less than a month ago, two other central banks run a test on the wholesale CBDC transactions of digital Swiss Franc and Euro. However, no deadline was provided with respect to the implementation of a wCBDC.

Digital Currency Experiments around the World

With the rise of crypto and other digital currencies, the financial world is changing. CBDCs are attracting attention everywhere by governments and central banks. While the Australian Reserve Bank’s CNDC research exposed several tangible benefits, Kazakhstan’s central bank discovered favourable outcomes in its CBDC-based project. Russia, too, is working on releasing a digital Ruble.

While a majority of the firms are working on implementing a wholesale CBDC, individuals and enthusiasts of crypto are looking forward to its adoption within the retail segment too. Private transactions, however, do take place on distributed ledger technologies. For example, HSBC undertook a PVP foreign exchange trade settlement last week.

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Gladis Monteiro

Content specialist with interest across sectors like Finance, Politics, Environment, Technology & Education. Loves Fiction! A reader, dreamer & blogger. When not writing, you will find her enjoying solitude like her cats

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