HSBC and Wells Fargo plan to use blockchain for forex transactions

The shift in traditional financial institutions’ attitudes towards cryptocurrency and blockchain technology is a rather historical moment, and it has been happening slowly but surely over the last few years. Now, even the biggest ones are openly coming out with plans to utilize these technologies and improve their own systems.

For example, in a recent press release, Wells Fargo — a major US financial services organization — and HSBC Bank — a British monetary institution — announced their intention to use blockchain technology to settle matched forex transactions. The two entities have teamed up to use distributed ledger technology for processing four major fiat currencies — USD, CAD, GBP, and EUR, with more to be added in the future.

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Both banking giants stand to benefit from transparency of settlements, and the solution will allow them to use PvP operations to reduce the risks and costs of processing forex settlements.

The first step in transforming the financial sector

Wells Fargo’s Co-Head of Macro, Mark Jones, said that this will be the first time blockchain is used in such a way in history and that this will be the first step of many utilizing transformative tech across the financial sector. The shared ledger will not only reduce the risks but also increase the speed and efficiency of settlements.

As for HSBC, it revealed that it was quite hopeful about expanding the system and that the goal is to add more participants and introduce a central FMI (Financial Market Infrastructure) provider in order to manage its FX Everywhere platform’s standard.

The company’s global head of FX Partnerships & Propositions, Mark Williamson, stated that the financial services continue to digitize the store of payments and value on the blockchain, and HSBC Bank is delighted to work with Wells Fargo in the adoption of this “cross-border digital backbone for the confirmation and settlement of forex trades.”