ISDA and Ant International Lead New Industry Report on Use of Tokenised Bank Liabilities for FX Settlement and Cross-Border Payments Under Project Guardian
The International Swaps and Derivatives Association (ISDA) and Ant International have taken the lead in a groundbreaking industry report focused on the utilization of tokenized bank liabilities for foreign exchange (FX) settlement and cross-border payments under the initiative named Project Guardian. This report explores the potential of leveraging shared ledger technology to drive the adoption of tokenization, facilitating 24/7 real-time FX settlement, and reducing costs for businesses globally.
Key Highlights of the Report
The report, developed in collaboration with members of the Task Guardian FX workstream, proposes innovative concepts to promote the use of tokenized bank liabilities and shared ledgers in the financial market. It aims to enable seamless FX settlement and enhance transaction banking services through:
- Design principles for tokenized bank liabilities to standardize market practices and ensure interoperability
- Identification of key risks associated with shared ledger-based payments and corresponding mitigation strategies
- Real-world use cases demonstrating the effectiveness of shared ledgers and tokenized payments in transaction banking
Challenges in Cross-Border Payments Addressed
The report recognizes the existing challenges in cross-border payments, such as FX-related risks, high costs, and time delays, especially for digital economy enterprises. By showcasing the potential of tokenized bank liabilities and shared ledgers, the industry group illustrates how this technology can lead to faster, more secure, and efficient cross-border payments. The implementation of interoperable bank services can facilitate 24/7 transaction completion with real-time FX settlement, reducing payment settlement times to minutes or even seconds.
Industry experts estimate that establishing a universally accepted framework could potentially reduce cross-border transaction costs by 12.5%, resulting in savings exceeding US$50 billion by 2030.
Expert Insights
According to Sam Boolman, ChainIntel’s lead analyst, “The collaboration between ISDA, Ant International, and other industry players to explore tokenization in FX settlements marks a significant step towards enhancing efficiency and reducing risks in cross-border transactions. The potential cost savings and operational improvements outlined in the report highlight the transformative impact of tokenized bank liabilities in the financial industry.”
Future Developments
ISDA, Ant International, and the Project Guardian industry group plan to further expand the application of shared ledgers and tokenized bank liabilities by developing additional use cases tailored for businesses of all sizes. By integrating this innovative technology with existing banking systems and supporting various digital assets, organizations can leverage the benefits of tokenization to streamline their financial operations.
Conclusion
The joint efforts of ISDA, Ant International, and other collaborators under Project Guardian signify a progressive shift towards enhancing liquidity, efficiency, and global market effectiveness through the adoption of tokenized bank liabilities and shared ledger technologies.
