The Central Bank of Bahrain has announced the successful completion of a trial of JP Morgan’s JPM Coin digital money system. Commercial Bank ABC and its client Aluminium Bahrain (ALBA) were participating in the tests by making real-time US Dollar payments with US counterparties, who are also JP Morgan bank account holders. The trial was conducted using Blockchain technology and was overseen by the central bank.

JPM Coin System is a permissioned Blockchain system that enables its participant who are account holders of JP Morgan to transfer fund denominated in US Dollars on its platform. Transactions involving US Dollars can be made without using the SWIFT platform.

Transaction is a testimony that Kingdom of Bahrain is committed to embrace emerging technology and be at the forefront of fintech evolution involving cross border payments.

Present cross border payment has various bottlenecks and inefficiencies. JPM Coin System is one of the specialized Blockchain enabled payment platform, helping corporations in providing next generation payment solutions. JPM Coin reflects the changing and innovative nature of the financial services industry. It is the part of Onyx platform which helps in facilitating transfer of digital assets as well as information on its platform. These solutions are part of next-generation corporate treasury services and are aimed to overcome the complicated issues of cross-border payments and assist simplify its clients’ money-moving demands.

With the launch of JPM Coin in 2019, J.P. Morgan became the first global bank to develop a network to support immediate payments utilizing blockchain technology, enabling twenty-four hours, business-to-business money flow. 

Payment landscape is undergoing a precedented change globally. BIS is working on decentralized payment platform and bridges.  Recently J.P. Morgan has released its report on efficiencies that can be achieved by operation and governance of m mCBDCs projects which will help in   unlocking $120 billion worth of Cross-Border Payments.

Global corporates incur more than $120 billion in overall transaction costs each year, according to the analysis, out of nearly $24 trillion in wholesale payments moving across borders each year. This does not include potential hidden costs in stranded liquidity and delayed settlements.

This cost can be saved by using full-scale multi-central bank digital currency (mCBDC) network which will not only facilitates round-the-clock, cross-border payments on a real time basis but will also save the transaction cost.  

Globally these changes are symbolic as well. Presently the nations that have complete control over cross-border money flow including the related systems, bridges and intermediaries have a greater say in the Global Financial Order. Presently the Cross Border Payment system is dominated by SWIFT. Any transaction involving US Dollars are settled using the SWIFT platform We are at the beginning point of evolution where Centralized Cross Border Payments may be replaced by numerous Decentralized systems and bridges.

Bureau Galctik Views