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Mastercard, Citi, JPMorgan Trial Ledger Tech for Bank Money Settlement

Mastercard and major US banks test shared-ledger for streamlined settlement of tokenized assets, aiming to revolutionize financial transactions.

By Max Weldon

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5/8, 05:24 EDT
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
The Bank of New York Mellon Corporation
Citigroup, Inc.
JP Morgan Chase & Co.
Mastercard Incorporated
Toronto Dominion Bank
U.S. Bancorp
Wells Fargo & Company
Zions Bancorporation N.A.
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Key Takeaway

  • Mastercard, Citi, JPMorgan, and other major US banks are testing ledger technology for settling tokenized assets including bank money and securities.
  • The Regulated Settlement Network aims to streamline cross-border transactions, reduce errors, and fraud by using a shared ledger.
  • This trial could transform financial systems by enabling the settlement of diverse assets on a single system.

Mastercard Leads Tokenization Test

Mastercard Inc. has partnered with major US banks, including Citigroup Inc., JPMorgan Chase & Co., US Bancorp, Wells Fargo & Co., and Visa Inc., to initiate a trial of shared-ledger technology. This technology aims to facilitate the common settlement of tokenized assets, such as commercial-bank money and Treasury and investment-grade debt securities. The Regulated Settlement Network proof-of-concept will simulate transactions in dollars, aiming to streamline cross-border and system-wide transactions while minimizing errors and fraud risks.

Transforming Financial Settlements

The shared-ledger technology under trial could revolutionize financial transactions by enabling the settlement of diverse assets, including commercial bank money, wholesale central bank money, and securities, on a single system. This marks a significant departure from the current practice where these assets are managed on separate systems. The initiative builds on a 12-week test conducted in late 2022, which focused on domestic interbank and cross-border payments in dollars.

Broad Industry Collaboration

The trial sees participation from a wide array of financial institutions and entities. Alongside Mastercard and the aforementioned banks, Swift, TD Bank NA, and Zions Bancorp are also participating. The Bank of New York Mellon Corp. and the International Swaps and Derivatives Association are contributing their expertise to the project. Furthermore, the New York Innovation Center at the Federal Reserve Bank of New York will observe the trial, underscoring the significant interest and potential impact of this technology on the financial industry.