JPMorgan uses blockchain for 24/7 dollar transfers with Indian banks

JPMorgan’s Move Towards Blockchain Technology

In an age of increasing de-dollarization, global financial services powerhouse, JPMorgan, is delving deeper into the potential of blockchain technology. The objective is to mitigate certain limitations associated with traditional financial operations.

Collaborating with Indian Banks for Blockchain-based Settlement

As reported by Bloomberg on June 5, JPMorgan is collaborating with six leading Indian banks to introduce a blockchain-based platform. This platform is set to facilitate interbank settlements of U.S. dollar transactions. The participating entities include HDFC Bank, ICICI Bank, Axis Bank, Yes Bank, IndusInd Bank, and JPMorgan’s own banking unit at Gujarat International Finance Tec-City (GIFT City).

Aiming for Expanded Capacity and Real-time Transactions

The blockchain initiative’s primary objective is to enhance the existing settlement system’s capacity, as per Kaustubh Kulkarni, JPMorgan’s senior country officer. The executive elaborated that the platform would allow the banks to process instantaneous transactions 24/7. This marks a significant improvement over the current system, where transactions can take several hours and are unavailable on weekends and public holidays.

Positioning GIFT City as an Alternative Trading Hub

Aside from facilitating faster transactions, the initiative is also strategically aimed at positioning GIFT City as a competitive alternative trading center to Singapore and Dubai.

Blockchain Platform Onyx and the Pilot Project

For the next few months, JPMorgan will conduct a pilot project to assess the participating banks’ experiences with this new setup. The pilot project, set to launch on Monday, will utilize JPMorgan’s blockchain platform Onyx, following approval from the International Financial Services Center Authority. Onyx was launched by JPMorgan in 2020 with the aim of enhancing the quality of wholesale payment transactions. As of April 2023, the bank had processed nearly $700 billion in short-term loan transactions via Onyx.

Global De-Dollarization and Its Effects

This development comes at a time when JPMorgan currency strategists have observed some emerging signs of de-dollarization. “De-dollarisation is evident in FX reserves where the dollar’s share has declined to a record as share in exports declined, but is still emerging in commodities,” they explained.

In conclusion, as the blockchain technology landscape evolves, it will be fascinating to observe how traditional banks like JPMorgan continue to adopt and integrate these innovative solutions to enhance their services.

Keywords: Blockchain, Dollar, Business, Banks, India, JPMorgan Chase