The system that supports international transactions is years behind the times. Can IBM’s World Wire catapult us into the present?
On Monday, March 18, technology giant IBM announced that its new cross-border payments network, intended to clear and settle foreign exchange transactions in seconds instead of days or weeks, is widely available.
The pilot phase of the new payment network, dubbed World Wire, was first announced in July 2018. World Wire, which went into limited production on Monday, is built on the Stellar protocol and conducts transactions using Stellar Lumens and the US dollar-pegged Stronghold stablecoin. The network currently boasts payment locations in 72 different countries and can conduct transactions in 47 fiat currencies between 44 different “banking endpoints.”
A subsequent Forbes article says the platform already has the ability to add more types of virtual currency, such as bitcoin or Ether, and more crypto tokens will be added based on the demand of participating financial institutions.
So far, six international banks have signed letters of intent to develop their own stablecoins to be used on the World Wire platform upon approval from their specific regulators. Although not all the names of participating banks were disclosed, the platform’s initial contributors include Banco Bradesco, Bank Busan, and Rizal Commercial Banking Corporation.
According to Jesse Lund, IBM’s head of blockchain for financial services, “the system today that supports the majority of international transactions is really based on a network infrastructure that hasn’t really changed in more than fifty years. But the reality is that it doesn’t move at the pace that the new global consumer experience requires.”
Through World Wire, IBM hopes to bring international transaction methods into the twenty-first century by eliminating intermediaries, reducing the rigmarole of sending money, and cutting the cost of sending cross-border transactions.
Here’s how IBM Blockchain says World Wire works. When two participating financial organizations want to transact on the new platform, they must first agree on a specific stablecoin, digital currency, or other digital asset to link their two respective fiat currencies. Once this is decided, the sending institution uses its interface, which is connected to World Wire’s APIs, to convert its fiat into the agreed-upon digital asset. World Wire sends that virtual asset to the receiving financial institution in (nearly) real time before the process is completed in reverse.
Lund describes why he thinks World Wire is a game changer:
“The novelty of World Wire is that payment message instructions and the store of value – the actual money – move together as a sequenced set of operations in a single transaction on a single network. That’s pretty profound because it’s no longer about just making accounting entries, it’s also about moving real monetary value in conjunction with those accounting entries. That’s never happened before. That’s something entirely new.”
IBM has been very active in the development and application of blockchain technology. In October 2018, it rolled out its Food Trust blockchain platform, which is intended to allow participants access to data on the supply chain for certain food items. In January of this year, Big Blue revealed a collaboration with Ford, LG, and MineHub to develop two different blockchain pilots to improve the transparency and efficiency of the mining industry. Just a few days later, the tech giant joined with healthcare plan providers Aetna, Anthem, and Health Care Service Corp. to design a blockchain-powered network to share and store health data.
Nathan Graham is a full-time staff writer for ETHNews. He lives in Sparks, Nevada, with his wife, Beth, and dog, Kyia. Nathan has a passion for new technology, grant writing, and short stories. He spends his time rafting the American River, playing video games, and writing.
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