We’ve reached out to R3 on the topic but did not receive a response in time for publication. And Commerzbank has a close relationship with R3. R3, with its massive banking client base and enterprise blockchain Corda would be in pole position to orchestrate a similar system. That platform uses Ethereum-based technology, as does Fnality. However, JP Morgan is extending the JPM Coin technology to be used for a multi-currency interbank settlement system in Singapore, in association with DBS Bank and Temasek. JP Morgan grabbed headlines for its JPM Coin, which tokenizes JP Morgan bank account balances. JP Morgan has a project for interbank tokenized payments
What’s discussed here is a separate initiative for commercial bank money. Commerzbank is already a participant in Fnality, a consortium of banks looking to create a common settlement token using central bank money. This would involve tokenized cash from one bank being interchangeable with another bank’s tokens. The challenge is the money is still siloed and can only be sent to other organizations that hold accounts at the same bank.īased on conversations, a little speculation, and confirmation from other sources, it seems a new blockchain payment system is under discussion. Two examples of banks that have disclosed tokenized commercial bank money are JP Morgan and Russia’s Sberbank. The Commerzbank executive emphasized the need for fungibility and interchangeability. Linking out to conventional payment systems introduces the risk of failed payment and reduces the efficiency advantages that blockchain offers.
Many business blockchain activities involve payment, whether that’s settling an invoice, trade finance, or purchasing a financial asset. In the meantime, a working solution that bridges blockchain networks with traditional payment systems could help,” said Kraft. “Either you need fungible tokenized commercial bank money, or maybe even central bank money, which is currently in discussion. "Despite the Terra-Luna incident I think crypto and DeFi won't disappear - though they might be held back - because the technology and the bushiness innovation behind these developments are likely to be important for our future financial system," Yue said.In an interview yesterday, Sebastian Kraft, Senior Product Owner of Commerzbank’s blockchain and DLT activities, spoke about the need to have tokenized cash on ledger to unlock the benefits of blockchain technology. Stablecoins and crypto exchanges are gateways to DeFi projects, and Yue said it was easier to regulate them than the products themselves.
#Bank tokens code
HKMA CEO Eddie Yue said more scrutiny of stablecoins could also help reduce risks from DeFi, which aims to use computer code to remove the need for financial intermediaries from lending, investing and other financial activities. Lowe and his fellow panelists agreed that more needed to be done to create a sufficiently strong regulatory system for such tokens. "I tend to think that the private solution is going to be better - if we can get the regulatory arrangements right - because the private sector is better than the central bank at innovating and designing features for these tokens, and there are also likely to be very significant costs for the central bank setting up a digital token system," he said.
"If these tokens are going to used widely by the community they are going to need to be backed by the state, or regulated just as we regulate bank deposits," said Lowe. The risk of such tokens for financial systems was underscored in May when crypto markets were sent tumbling by the collapse of one stablecoin TerraUSD and its paired token Luna, though these helped underpin a network of DeFi applications, rather than being used to make real world payments. dollar, which are typically used as a store of value and to make payments. This is partly in response to the development of so-called stablecoins, privately issued tokens such as Tether and USDC, whose value is pegged to that of a traditional asset, often the U.S. Many central banks around the world are developing so-called central bank digital currencies (CBDCs), either retail tokens to be used directly by consumers or wholesale tokens to be used by banks within the financial system. At the same discussion, the Hong Kong Monetary Authority (HKMA) chief said greater scrutiny of such tokens could also help reduce risks from decentralised finance (DeFi) projects, part of the crypto currency ecosystem. Phillip Lowe was speaking in a panel discussion at the G20 finance officials meeting in Indonesia that was streamed online. July 17 (Reuters) - Consumer-focused digital tokens issued by private companies could be better than central bank-issued tokens assuming the companies can be regulated appropriately, the Australian central bank governor said on Sunday.
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