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UOB and HSBC have completed live cross border transactions in Hong Kong dollars on Swift‘s blockchain based ledger, making UOB the first Singapore headquartered bank to go live on the platform. It follows HSBC and Standard Chartered’s inaugural transaction last week.
The Swift ledger provides an orchestration layer between separate tokenized deposit platforms operated by banks, rather than actually processing the payments. As with all commercial bank money payments, there are two steps. First, there’s the client payment, which is where each bank’s tokenized deposits come in, and second, the settlement between the banks, which can happeno orchestrate the netting of interbank settlement
Beyond the Hong Kong dollar pilot, UOB plans to execute Singapore dollar and US dollar transactions on the ledger in September, involving additional partner banks. What’s notable is the transactions will include domestic interbank payments, a use case that extends the ledger beyond the cross border focus Swift originally positioned it for.
The question we’ve posed to UOB is why it plans to use Swift for domestic transactions. We could see multiple possible reasons. Corporate multi currency payments is one, to support 24/7 transactions in currencies not covered by Singapore’s FAST payment system, which already handles SGD around the clock. But there are other potential domestic reasons too.
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Image Copyright: tang90246, Deposit Photos
Source: www.ledgerinsights.com