MOUNT LAUREL, N.J. — TD Bank said it has successfully moved real U.S. dollars between two of its domestic entities using a tokenized payment platform being tested as part of an international effort to modernize wholesale cross-border payments.
The news comes at the same time the bank was reporting a “service disruption” on Tuesday, with access unavailable on its website.
The transaction involved TD New York Branch, TD Securities LLC and TD Bank, N.A., with BNY serving as the clearing bank and intermediary, according to a statement from TD Bank.
TD said the transaction marked the first time it has moved real U.S. dollar funds between two domestic entities using the Project Agorá platform.
Project Agorá is a public-private initiative organized by the Bank for International Settlements and the Institute of International Finance to examine how tokenization and other emerging technologies could improve wholesale cross-border payments.
The transaction was conducted as part of the project’s real-value testing involving central banks and private financial institutions, TD said.
Test Uses Tokenized Money, Atomic Settlement
TD said the test demonstrated that tokenized money could be issued on the Project Agorá platform and transferred instantly between its entities, with BNY acting as intermediary.
The transaction used atomic settlement, in which linked portions of a transaction are completed simultaneously or not at all. The approach is intended to reduce settlement risk and provide greater certainty for transactions involving multiple parties or currencies.
TD said the test demonstrated the feasibility of using distributed ledger technology, or DLT, to conduct transactions involving real money between financial institutions.
‘Responsible Innovation’
“Project Agorá reflects the kind of responsible innovation that has the potential to meaningfully improve how money moves across borders,” Jo Jagadish, head of digital and payments and consumer deposits at TD Bank U.S., said in a statement.
Jagadish said the testing demonstrated the potential benefits of collaboration among commercial banks, central banks and the BIS Innovation Hub.
“This was a great example of what’s possible when the public and private sectors come together with a shared ambition to make global money movement faster, safer and more efficient,” Jagadish said.
BNY Chief Product and Innovation Officer Carolyn Weinberg said the project also demonstrates the potential for tokenized deposits to improve cross-border transactions.
“Project Agorá highlights the potential of tokenized deposits making cross-border payments more efficient, transparent and resilient,” Weinberg said in the TD statement.
28 Institutions Participate in Testing
The real-value testing included 28 central banks and financial institutions across Asia, Europe and North America, according to TD.
Participants completed transactions involving selected currencies totaling approximately 800,000 Swiss francs. The testing covered 17 transaction scenarios, with individual transactions ranging from about 9,000 francs to 125,000 francs or their equivalents in local currencies.
The project is examining whether a shared digital platform could allow financial institutions to settle payments involving multiple currencies while incorporating payment instructions and compliance checks into the process.
TD said such a system also could provide participants with greater visibility into transactions from initiation through settlement.
Cross-border wholesale payments currently can require multiple intermediaries and processing steps, potentially resulting in delays and limited visibility for participating institutions.
Project Examines Tokenized Deposits, Central Bank Reserves
Project Agorá is testing a multicurrency, shared programmable platform that records tokenized versions of commercial bank deposits and central bank reserves while allowing participating central banks to retain control over their currencies and operations, according to TD.
The prototype also is examining automated payment instructions, common data standards and technology designed to reduce manual processing and reconciliation.
In addition to atomic settlement, the project is studying privacy technology and legal issues, including determining when payments become final across different jurisdictions.
TD said it plans to continue working with public- and private-sector participants as the financial industry evaluates the use of tokenization, programmable settlement and shared infrastructure in wholesale cross-border payments.
