Banque de France, HSBC, IBM test interoperability of wholesale CBDC

finextra.com:

Around the world, central banks are considering the viability of their own digital currency. Further, the efficiency and security that CBDC affords could bolster payments in developed countries and promote financial inclusion in emerging markets.

Ahead of the Banque de France CBDC experiments, HSBC launched its Digital Vault Service, which can hold securities and process and manage delivery versus payment (DvP) and payment versus payment (PvP) settlements.

HSBC also uses blockchain for its FX Everywhere service, a DLT solution for the netting and settlement of FX transactions and payments.

In May 2020, HSBC partnered with IBM to propose a series of experiments for the Banque de France’s wholesale CBDC programme.

While previous trials and test had shown how CBDC, digital securities or FX could work on DLT, this experiment covered the full end-to-end transactional lifecycle and was conducted in a hybrid cloud environment of public and private clouds, using on-premises data sources.

In a statement, HSBC says: “The success of this experiment is a milestone in showing interoperability across different DLTs and technologies, and how CBDCs could save time, reduce market risk and improve security for transactions between central banks, commercial banks and clients all over the world.”

For a fictional customer named Startmint, which has local manufacturing capabilities but international consumers, HSBC, IBM and the central bank took four months to set up a testing environment for this use case.

The three scenarios that were selected to test the capabilities and benefits of a wholesale CBDC implementation were: