LONDON — Standard Chartered and HSBC are reporting they have completed the first live interbank transaction using Swift’s blockchain-based ledger, demonstrating how tokenized bank deposits could be used to support round-the-clock cross-border payments.
The banks exchanged payment messages through Swift’s ledger, with resulting obligations recorded as tokenized deposits on HSBC’s Tokenised Deposit Service and Standard Chartered’s tokenized-deposit infrastructure.
Swift’s blockchain ledger served as an orchestration layer, allowing the obligations between the two banks to be matched and netted before final settlement through existing financial systems, Standard Chartered said.
First Such Payment
According to Standard Chartered, the transaction represents the first interbank payment executed on the Swift ledger and follows Swift’s announcement in July that the platform was ready for initial use. Seventeen banks across six continents were preparing to pilot live tokenized-deposit transactions as part of an effort to provide 24/7 payment availability and improve liquidity management.
Tokenized deposits are digital representations of commercial bank deposits recorded using distributed ledger technology. Unlike stablecoins issued by nonbank entities, tokenized deposits remain liabilities of regulated banks.
Standard Chartered said the transaction demonstrates the potential for different banks’ tokenized-deposit systems to operate together while continuing to rely on existing regulated financial infrastructure for final settlement.
‘A Key Pillar’
“Tokenised deposits are a key pillar of Standard Chartered’s digital assets strategy which aims to build end-to-end solutions that enable our clients to transact, settle and manage tokenised liquidity and value across borders,” Mark Willis, Standard Chartered’s head of emerging payments, transaction services and digital assets, said in a statement.
Willis said interoperable tokenized deposits could help corporate and institutional customers move liquidity across markets, improve working-capital management and support real-time treasury operations.
Lewis Sun, HSBC’s head of digital currencies, called the transaction a “landmark moment” for tokenized deposits.
“It demonstrates how digital money issued by banks can be interoperable across institutions while maintaining the integrity and regulatory oversight of the existing financial ecosystem,” Sun said.
Moving Liquidity
HSBC said interoperability between tokenized-deposit platforms could help corporate customers move liquidity among financial institutions, increase visibility into their cash positions and reduce some of the complexities associated with conventional cross-border transactions.
