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The government of Bahrain, the third richest Arab country, is working with American investment bank JPMorgan on a digital currency settlement pilot.
The Central Bank of Bahrain officially announced Tuesday that the bank is now collaborating with JPMorgan and the Arab Banking Corporation BSC, or Bank ABC, in a pilot scheme to introduce an instant cross-border payment solution based on digital currency technology.
Aiming to cut settlement processing time, the new digital currency pilot will involve transferring of funds from and to the Kingdom of Bahrain in United States dollars for payments from buyers and suppliers. The central bank emphasized that it could move forward with the project to extend the collaboration to a central bank digital currency, or CBDC.
“Through this pilot with JPMorgan and Bank ABC, we aspire to address the inefficiencies and pain-points which exist today in the traditional cross-border payments arena,” CBB Governor Rasheed Al-Maraj said.
Ali Moosa, JPMorgan vice chair of wholesale payments, noted that the new collaboration involves the company’s digital currency-focused division known as Onyx. Piloted in 2017, the product was originally referred to as Interbank Information Network and rebranded as Liink in October 2020.
“JPMorgan Onyx has been setup with the mandate to lead the buildout of next generation clearing and settlement infrastructures and we are delighted to partner with a leading central bank and regulator like the CBB to lead the buildout of a next generation payment and settlement infrastructure,” the exec noted.
JPMorgan has been aggressively promoting its blockchain technology expertise to collaborate with global jurisdictions on cross-border payments. In late April, JPMorgan partnered with Singapore’s largest bank, DBS, and state investment company Temasek to launch a new blockchain venture focused on global payments and interbank transactions. The bank previously provided its Liink technology to an Indian government-backed bank to reduce transaction costs and improve cross-border payments.