Today Singapore’s largest bank DBS, JP Morgan and Singapore’s state-owned investment firm Temasek announced the creation of a joint venture, Partior, to develop a wholesale blockchain-based payment network targeted at cross border transactions. The solution, first unveiled in December, will enable many commercial banks to digitize deposits creating programmable money for cross border payments, trade transactions and foreign exchange settlement.
Once developed, the multi-currency clearing and settlement solution will enable 24/7 instant settlement or atomicity, where both payment legs succeed or fail in real-time, thereby reducing risks and delays. We note the avoidance of mentioning tokenized money and JPM Coin because people tend to pigeonhole such solutions as stablecoins. Instead, this is a settlement solution where digitized cash represents bank account balances.
“The current hub and spoke arrangement in global payments often results in delays as confirmations from various intermediaries are needed before a settlement is treated as final,” said Piyush Gupta, CEO of DBS. “This in turn has a knock-on effect and creates inefficiencies in the final settlement of other assets.”
He continued, “By harnessing the benefits of blockchain and smart contracts technology, the Partior platform will address current points of friction. The open platform will enable banks around the world to provide real-time cross-border multi-currency payments, trade finance, foreign exchange and DVP securities settlements on a world-class platform, with programmability, immutability, traceability built into its suite of services.”
Initially, the focus is on Singapore-based banks for transactions in USD and SGD, but the intention is to offer more currencies and expand into other jurisdictions.
“We believe a shared LEDGER infrastructure such as the Partior platform will change the way payments are cleared and settled, through this first-of-its-kind, wholesale payments rail based on digitised commercial bank money,” said Takis Georgakopoulos, Global Head of Wholesale Payments, JP Morgan.
He continued that it will be a “blockchain-based wholesale payments infrastructure where information and value can change hands around the world in a 24/7, frictionless way. J.P. Morgan is committed to being a leader in this space as our clients transition towards multiple bank platforms, de-centralised networks and programmable money.”
Partior is positioned as complimenting central bank digital currency efforts and use cases.
The joint venture partners are keen to attract other banks. A larger network will encourage the co-creation of solutions for foreign exchange payment versus payment (PvP) and delivery versus payment (DvP) for securities and other transactions.
Partior will need regulatory approval in order to launch. However, the solution grew out of Project Ubin run by the Monetary Authority of Singapore (MAS).
“The launch of Partior is a global watershed moment for digital currencies, marking a move from pilots and experimentations towards commercialisation and live adoption,” said Sopnendu Mohanty, MAS Chief FinTech Officer.
The news comes just a week after the Bank of England gave the green light for central bank omnibus accounts. This is a key step for Fnality, the interbank settlement network owned by 15 major financial institutions.
