The latest technology developments, product launches and business developments in and around the world's wealth management sector.
HSBC and IBM said late last week that they have successfully tested an advanced token and digital wallet settlement capability involving direct deals between two central bank digital currencies.
A central bank digital currency allows individuals and firms to make electronic payments directly using money issued by an institution such as the US Federal Reserve, Swiss National Bank or the European Central Bank, for example.
Several previous initiatives have individually demonstrated support for CDBCs, securities and/or foreign exchange. The experiment, which was designed and implemented within a four-month period, successfully executed across ledgers in support of such a complex multi-asset transactional scenario, HSBC and IBM said in a statement.
The experiment tested an end-to-end transactional lifecycle covering CBDCs (minting and allocation), eBonds (Delivery Versus Payment (DVP) across primary issuance and secondary trading and coupon payments), and foreign exchange (pricing and Payment Versus Payment (PVP) settlement).
The project was initiated by Banque de France as part of a programme to test the idea of a “digital euro.”
The idea of digital currencies is spreading as the use of bank notes continues to diminuish. The Bank for International Settlements – the “central banker’s central bank” – in 2018 warned that wider use of digital currencies carries risks, makes commercial bank deposit funding more unstable, and gives central banks more power to affect deployment of capital, reducing the efficiency of the private sector in allocating resources.