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Mastercard, Citi, JPMorgan Test Ledger for Settling Bank Money - BLOOMBERG
BY , Bloomberg News
The Mastercard logo.. Photographer: Amir Hamja/Bloomberg , Photographer: Amir Hamja/Bloomberg
(Bloomberg) -- Mastercard Inc. is joining with some of the largest US banks to test shared-ledger technology that would allow the common settlement of tokenized assets such as commercial-bank money as well as Treasury and investment-grade debt securities.
The Regulated Settlement Network proof-of-concept will simulate transactions in dollars, Mastercard said in a statement Wednesday. The goal is to make transactions across borders and systems faster and easier, and to reduce the chance of error and fraud.
The ledger technology would likely dramatically change the way things are done in the financial world today. Currently, commercial bank money, wholesale central bank money, and securities such as investment-grade debt all reside on separate systems. But once these assets are turned into tokens that run on a distributed ledger, that can allow for settlement on the same system.
The trial builds on a previous, 12-week test began in late 2022 that focused on domestic interbank payments and cross-border payments in dollars.
Other participants in the new trial include Citigroup Inc., JPMorgan Chase & Co., US Bancorp, Wells Fargo & Co., Visa Inc., Swift, TD Bank NA and Zions Bancorp. Project contributors, providing their expertise for the trial, include the Bank of New York Mellon Corp. and the International Swaps and Derivatives Association. The New York Innovation Center at the Federal Reserve Bank of New York will observe the participants’ research and experimentation with tokenized settlement assets.
Financial companies around the world have been experimenting with shared ledgers for tokenized transactions. For example, Mastercard, Barclays Plc and Citi are among financial institutions involved in a new UK pilot announced in April.
The test doesn’t mean the companies involved will pursue commercial deployment.
