JPMorgan Chase & Co. has partnered with six Indian banks in India to settle interbank dollar transactions in a growing national commerce hub. Alongside HDFC Bank, ICICI Bank, Axis Bank, Yes Bank, IndusInd Bank, and JPMorgan’s unit, they will establish a blockchain-based platform that settles interbank dollar transactions.
The existing system processes settlements in hours and does not function on weekends or public holidays. By leveraging blockchain technology, the system will now be able to complete transactions instantly on a 24/7 basis. The platform will launch on Onyx, JPMorgan’s blockchain-based system that they launched in 2020. Onyx has managed $700 billion in transactions as of April 2023.
JPMorgan’s infrastructure investment in this area of India was not the first. Narendra Modi, Prime Minister since 2014, offers companies that set up within the International Financial Services Center of Gujarat International Finance Tec-City (better known as GIFT City) an 100% tax holiday for ten years. In GIFT City, bankers hold over $33 billion, with exemptions from tax rules that frustrate businesses in India, making it an attractive option for international investors.
The project launches in early June 2023, with JPMorgan monitoring its process and banks’ experiences with the technology. GIFT City hopes that the innovation of this new system will turn Gujarat into an alternative trading center like Singapore and Dubai.
While this investment benefits the region, strategists connect JPMorgan’s expansion into international markets and the emerging global de-dollarization. Brazil, Russia, India, China, and South Africa are all moving away from the dollar’s dominance, causing the currency to lose its stronghold on global economies.
This news signals how instrumental blockchain technologies can become in the development of financial ecosystems. Equally, it represents the first of many movements of banks and governments to prepare for the possible declining impact of the US dollar.
Additional Sources
https://cointelegraph.com/news/jpmorgan-uses-blockchain-for-24-7-dollar-transfers-with-indian-banks