US-based financial giant Wells Fargo is developing a dollar-linked cryptocurrency that will run on the bank's first blockchain platform.
The product, called Wells Fargo Digital Cash, will initially be used for internal settlement pilots across the company's business.
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The company said in a press release on Tuesday that the digital token will enable it to settle internal cross-border payments through a global network. Its international outlets will also be able to use the token to transfer funds between each other.
Lisa Frazier, head of innovation at Wells Fargo, said that as banking services become increasingly digital, "the need to further reduce traditional border friction is growing, and today's technology puts us in a good position."
Wells Fargo said its proprietary Digital Book Technology (DLT) platform will enable it to transfer funds "in near real time" and "will not affect the underlying account, transaction history or reconciliation infrastructure."
It will also allow the company's international offices to transfer funds outside normal business hours, eliminate the need for third-party payment intermediaries, and reduce the time and cost associated with such transactions.
The pilot program is scheduled to begin next year and will start with a dollar fund transfer, but is expected to expand to other currencies. In the end, its goals include covering all branches of Wells Fargo worldwide.
“We believe that DLT has potential applications in many use cases, and we are actively taking this important step to apply this technology to the banking business in a substantial and scalable way. Wells Fargo’s digital cash has the potential to make rich countries Banks remove barriers to real-time financial interaction between multiple accounts across multiple markets worldwide."
Wells Fargo also previously launched other blockchain projects, including a banking service prototype and a trade finance platform for the cotton market. It also invested in blockchain financial startup Axoni.
In addition to internal settlement, the company also said it plans to use its DLT platform for "multiple" other applications.
It is worth noting that the rich country is not the only banking giant that is planning to launch its own cryptocurrency. JPMorgan Chase has announced that it will launch its own cryptocurrency, JPM Coin.