- JP Morgan takes a step into the blockchain route as the solution for interbank U.S. dollar transactions in India.
- JP Morgan partners with six banks in India to facilitate instant process transactions.
- JP Morgan will begin a pilot for their new initiative on Monday.
JP Morgan has moved to use blockchain to interbank U.S. dollar transactions in India as signs of global de-dollarization continue to fester.
A global financial company, JP Morgan, has sorted the path offered by blockchain and the benefits to come with it to eliminate restrictions of current traditional financing. In a bid to explore the benefits provided by a blockchain, JP Morgan has partnered with six central Indian banks to provide a blockchain-based platform that would help enable interbank settlements of U.S. dollar transactions.
The bank’s JP Morgan partners include ICICI Bank, IndusInd Bank, Axis Bank, HDFC Bank, Yes Bank, and a banking unit owned by JP Morgan at Gujarat International Finance Tec-City or GIFT City. The project has the aim to expand the capacity of the already present settlement system, according to JP Morgan’s senior country officer, Kaustubh Kulkarni; in his words, the platform being developed will allow the banks involved in the partnership to process instant transactions within 24 hours a day, seven days a week.
The current settlement system with interbank transactions could take several hours. In addition, the settlement is non-available on Saturdays, Sundays, or any public holidays, wherein the new settlement system created by JP Morgan’s blockchain pilot seeks to remove that issue by providing a 24/7 instant transaction process.
This is possible by leveraging blockchain technology to facilitate transactions on a 24/7 basis. It would ensure instant processing and enable GIFT City Bank to support its time zone and operating hours. The move also aims to help New Delhi secure GIFT City’s position as an alternative trading center to Singapore and Dubai.
According to JP Morgan’s senior country officer, the company will run a pilot project for the initiative for the next few months to analyze banks’ experience. The pilot process will launch on Monday, 13 June, using JP Morgan’s blockchain platform Onyx after they have acquired approval from the International Financial Services Center Authority.
JP Morgan launched their blockchain-based platform, Onyx, in 2020, intending to improve the quality of wholesale payment transactions. JP Morgan reportedly processed $700 billion in short-term loan transactions with Onyx as of April 2023.
This new initiative comes amidst JP Morgan’s currency strategists pointing out the emerging signs of a de-dollarization in Foreign exchange. “De-dollarization in FX reserves where the dollar’s share has declined to a record as share in exports, but can still be seen as emerging in commodities,” The strategists reported.
This new initiative by JP Morgan could change the way interbank transactions are done for the better if it works out.