JPMorgan, a global financial services firm, is making strides in its exploration of blockchain technology as a means to alleviate some of the constraints of traditional finance. The company has now collaborated with six leading Indian banks to roll out a blockchain-driven platform, designed to facilitate interbank settlement of U.S. dollar transactions, as reported by Bloomberg on June 5.
Participants in the Project
The consortium of participating banks includes HDFC Bank, ICICI Bank, Axis Bank, Yes Bank, IndusInd Bank, and JPMorgan’s own subsidiary at Gujarat International Finance Tec-City (GIFT City).
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Aiming for Enhanced Transaction Efficiency
The objective of this blockchain initiative is to enhance the capabilities of the present settlement system, states JPMorgan’s senior country officer, Kaustubh Kulkarni. The newly developed platform would enable banks to execute immediate transactions around the clock, seven days a week.
Under the prevailing interbank settlement system, transaction completion could take several hours. Furthermore, no settlements are available on weekends or public holidays. Kulkarni explains that JPMorgan’s blockchain pilot will bypass these restrictions:
“By leveraging blockchain technology to facilitate transactions on a 24×7 basis, processing is instantaneous and enables GIFT City banks to support their own time-zone and operating hours.”
Additionally, this initiative seeks to aid New Delhi in positioning GIFT City as an alternative trading hub to Singapore and Dubai.
The Pilot Project
Over the next few months, JPMorgan plans to conduct a pilot project to gather insights about the banks’ experiences. The pilot will be launched on Monday, utilizing JPMorgan’s blockchain platform, Onyx, following approval from the International Financial Services Center Authority.
JPMorgan’s Foray into Blockchain
JPMorgan unveiled its Onyx blockchain-based platform in 2020, aiming to enhance the efficiency of wholesale payment transactions. As of April 2023, the bank reportedly processed nearly $700 billion in short-term loan transactions via Onyx.
Interestingly, this development comes at a time when JPMorgan’s currency strategists are noting indications of emerging de-dollarization.
