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Cover story Sun Yang: the far-reaching impact of restructuring and connecting blockchain on the global financial industry

Time : 16/05/2022 Author : xnhdg6 Click : + -
        COVID-19 has a far-reaching impact on monetary policy. In March, 2020, the Federal Reserve launched the ultimate big move, announced a new round of quantitative easing, and vowed to buy unlimited amounts of U.S. Treasury bonds and MBS bonds in order to provide the necessary liquidity for the market. This has led all economies to follow suit, and private digital currencies have risen one after another. The vigorous development of private digital currency is, on the one hand, the background of global monetary policy, on the other hand, due to the steady, firm and orderly progress of blockchain technology system. With the development of digital currency and blockchain ecology in full swing, some national entities have been actively applying blockchain technology to improve financial infrastructure, mainly in the fields of cross-border payment, foreign exchange, gold trading, clearing and so on.
        There is a relatively consistent trend in these applications, which is to build a distributed financial Internet between financial institutions through blockchain to improve the efficiency of basic financial services. On February 24, 2021, according to the official website of the central bank, the Hong Kong Monetary Authority, the Central Bank of Thailand, the Central Bank of the United Arab Emirates and the digital currency Research Institute of the people's Bank of China announced the joint launch of the multilateral central bank digital currency bridge research project (m-cbdcbridge), aimed at exploring the application of the central bank's digital currency in cross-border payments. The project is supported by the bank for International Settlements Hong Kong Innovation Center. In September, 2018, continuouslinkedsettlementbank (CLS), a foreign exchange transaction settlement service giant headquartered in New York, is testing its inter-bank blockchain payment business, and at least seven banks will use the system.
        Clsnet is described as "the first global foreign exchange market enterprise application running on the blockchain". CLS provides settlement services for members of the foreign exchange market and real-time settlement services for 18 currencies. In January 2021, the average daily trading volume of CLS was $1.92 trillion. CLS provides customers with two options based on swift connection and clsnet connection. Singapore has created a blockchain based payment system, Ubin. The blockchain payment network is likely to achieve faster and cheaper international settlement. The commercial application of the system includes cross-border payment of multiple currencies and foreign currency exchange. In addition, the system will also realize the settlement of foreign currency denominated securities in other use cases.
        Based on the Ubin project, JPMorgan Chase is cooperating with DBS Bank of Singapore and Temasek, the national investment company, to launch a new blockchain company, partior, which focuses on global payments and interbank transactions. Partior supports real-time cross-border multi currency payment, trade financing, foreign exchange and DVP securities settlement on a world-class platform, and establishes programmability, tamperability and traceability in its service suite. Setl, a British blockchain start-up company that provides solutions for the development of blockchains for the financial sector, has obtained the license of autoritedesmarch financiers from the French securities regulatory agency, and can now connect to target2&mdash& mdash; A 1billion Pan European securities settlement network platform of the European Central Bank, which aims to improve the speed of cross-border payments.
        Setl managed the knowyourcustomer process required by financial regulators, dealing with capital contribution, redemption, transaction settlement and asset management on the 2017 Pan European fund accounting platform iznes. Socié té Gé né Rale, Citibank, Scotiabank and other global banks and financial institutions have completed the initial test of blockchain gold trading platform, with a total of 600 gold bullion transactions. The platform is jointly developed by Euroclear and Paxos, a blockchain start-up. It can provide more convenient and efficient clearing services for undelivered gold in the London gold and silver market, reduce risks and simplify post transaction processing.
        Ripple is an open payment network clearing system, which is committed to allowing different currencies in the world (including legal tender and virtual currency) to exchange freely, almost free and with zero delay. In September, 2013, ripple began to engage in inter-bank services, trying to solve the high cost of cross-border settlement caused by the agent bank system. After an unnamed remittance service provider adopted ripple's technology, its usage increased by 800% and the cost decreased by 95%. MoneyGram, the second largest remittance service company in the world, has five channels to use ripple's cross-border payment solution &mdash& mdash; ODL, an on-demand liquidity platform, is shifting 10% of its largest channel (remittance) from the United States to Mexico to XRP and ODL. XRP based ODL is currently used together with the US dollar, the euro, the Mexican peso, the Philippine peso and the Australian dollar (Figure 1).
        IBM has created a transnational settlement system based on blockchain technology, called ibmblockchainworldwire. Ibmblockchainworldwire integrates message exchange and digital asset exchange into a blockchain network, and banks use their digital assets for currency exchange. For example, bank X in the United States is preparing to remit money to bank y in Japan. Ibmblockchainworldwire sends the information of bank X and cryptocurrency to bank y account on the blockchain network at the same time, so as to realize near real-time clearing and settlement. Stellar is an open-source distributed financial infrastructure based on blockchain technology. This project is committed to reducing the cost of financial services, such as daily payments, cross-border wire transfers and asset transactions between enterprises.
        Traditional financial institutions have been actively applying blockchain to restructure their traditional financial services, improve user experience and enhance the competitiveness of their products. Blockchain has not changed the essence of financial business, but accelerated the digitalization of the whole process of financial business. However, at present, the application of blockchain in traditional financial services is still relatively primary. There have been some application cases in the fields of international letters of credit, digital asset trading platforms, digital bond issuance, digital bills, anti money laundering, mortgage loans and so on. The world's first transnational blockchain letter of credit denominated and settled in offshore RMB was issued by Standard Chartered Bank through the contour platform in May 2020 to support the transaction process of China Baowu iron and Steel Group Co., Ltd. (hereinafter referred to as "China Baowu group") importing iron ore from Australia.
        China Baowu group, Standard Chartered Bank, iron ore exporters and other transaction related parties completed the whole process of signing sales contracts, opening letters of credit, negotiation and presentation of documents by means of online cooperation. Digital letters of credit and transaction documents greatly simplify the transaction process and shorten the processing time; In addition, because the whole transaction does not need any paper documents, it avoids the international express service delayed by the epidemic. In December 2020, DBS Bank, Singapore's largest commercial bank, launched a digital trading platform based on blockchain technology to provide digital asset tokens (digital tokens supported by stocks, bonds and private equity funds of unlisted companies) Digital currency transactions (the exchange of bitcoin, Ethereum, bitcoin cash, ripo coin and Singapore dollar, US dollar, Hong Kong dollar and Japanese yen) and digital asset custody ecosystem (digital asset encryption key).
        The European investment bank, the investment arm of the European Union, has sold 100million euros (US $121 million) worth of digital bonds on the Ethereum blockchain. According to Bloomberg, these bonds consist of two-year notes with a coupon rate of zero. Investment banks Goldman Sachs, Societe Generale and Santander are also involved in this process. Societegeneralesfh, a subsidiary of Societe Generale, issued 100million euros of bonds as security tokens on the Ethereum blockchain. It was awarded the highest 3A rating by Moody's and Fitch. Shanghai bill exchange, together with the Institute of digital currency, organized the Bank of China Banknote credit card company, industrial and Commercial Bank of China, Bank of China, Shanghai Pudong Development Bank and Bank of Hangzhou to jointly build a blockchain digital bill platform. Based on the analysis of digital bills and their transaction characteristics, it completed a set of digital bill technology infrastructure based on blockchain technology and smart contracts.
        Interest, these digital bills running on the blockchain have independent life cycle and self-maintenance business processing capabilities, and can support a series of core business types such as bill acceptance, endorsement transfer, discount, rediscount, and cashing. Various business rules can be realized through smart contract programming. Under the unified deployment and guidance of Nanjing Branch of the people's Bank of China, the Jiangsu Provincial anti money laundering information sharing blockchain system led by Jiangsu Suning bank has been implemented, and the Jiangsu provincial branch of large state-owned banks such as industry, agriculture, China Construction and communications, and the Nanjing Branch of joint-stock banks such as China Merchants, CITIC and Minsheng have access to the system. On October 21, 2020, PayPal (nasdaq:pypl), a global payment platform, announced that it would provide cryptocurrency trading services, allowing customers to purchase, hold and sell cryptocurrencies directly from their PayPal accounts.
        And from the beginning of 2021, PayPal customers can use their cryptocurrency PayPal to pay 26million merchants around the world, and consumers can immediately convert their selected cryptocurrency balance into legal tender. In June, 2018, the Russian enterprise treasurer Association and the Central Bank of Russia jointly piloted the government operated masterchain blockchain platform, which was developed based on the encryption standard in Russia and based on the technical architecture of Ethereum, supporting P2P insurance and mortgage tracking and issuance. VTB, the second largest bank in Russia, paid a bank guarantee worth 392million rubles (5.4 million US dollars) for the digital, media and telecommunications company mtspjsc based on the platform.
        Accelerate the process of obtaining guarantees for beneficiaries and reduce paperwork. In addition, placing the data in the distributed ledger can eliminate the fraud risk caused by bank guarantee. Besides VTB, other institutions on the platform with the ability to pay guarantees include Gazprom, PSB, akbars, Alfa bank and raiffeisenbank. Each member will maintain a node and protect the network. Based on the support of masterchain platform, in May 2020, the Central Bank of Russia announced the development of a digital mortgage platform, which is supported by masterchain, a blockchain system independently developed by Russia.
        At present, the Russian central bank has submitted a proposal for the digital mortgage project to the government and the federal state registration, cadastre and cartographic service (rosreestr). Since the Central Bank of China set up a special team to study digital currency in 2014, there have been at least 8 kinds of digital RMB applications, including transportation subsidy payment, red envelope payment, offline QR code scanning payment, online e-commerce wallet online payment, passive video card "Hard Wallet", ATM cash and digital RMB two-way conversion, mobile phone based offline touch "double offline" payment, and cross-border payment. Financial evolution is the epitome of the development of the times. In 1171, the Bank of Venice provided capital preservation services for port trade.
        In 1602, securities were born to raise fleet funds for the East India Company in the era of great maritime geographical discovery. In 1870, the fund was born for the wave of infrastructure construction in the United States. (unfinished).
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