Project Guardian: Powering Global Treasury and Cash Management With Tokenized Cash

This panel discussion brings together industry leaders to explore the FX component of Project Guardian. 

Key highlights

John O'Neill, Group Head of Digital Assets & Currencies, HSBC

• Just like many institutions, HSBC created Orion as an issuance  and transaction platform for digital assets.
• For those platforms to fulfill their full potential and for the market to be liquid, we need effective forms of tokenized and digital money.
• HSBC is very engaged with Project Guardian because it offers the possibility of more rapid payments and settlement finality.
• Sandbox fatigue: After multiple sandboxes and experiments, the space has yet to see increased liquidity.

• BNY is focusing on four main use cases within the FX workstream:
• Using tokenized deposits to facilitate more efficient use of capital across global entities. This can overcome currency challenges across global entities by being able to instantaneously swap one currency for another - more efficient use of working capital.
• FX swaps and then investments in money market funds: Desire to gain yield on more idle cash or undeployed funds, real-time treasury management is needed in a 24/7 world.
• PVP efficiencies within DLT based networks: creating new blockchain networks and a centralised place to make PVP operations more efficient.
• Blockchain interoperability: There's very few corporates that use a single bank and a corporate may have as many as over 100 different banking partners. It's critical to be able to go across chains and transact for our clients, because they are looking for that just in time funding, for that more efficient use of working capital.
• He's been in the space since 2017, doing the same thing over again or having the same conversation. The difference this time is there's an earnest focus on client benefit, e.g. how this benefits Kelvin's business, how it benefits our clients' business.

• Travel use case: To allow instant tax refund into tourists' e-wallets in their local currencies.
• SME payment use case: During non-banking hours, companies can't move money between two companies or two locations. Use of blockchain to link some major banking partners and start to talk to them about tokenized deposits.
• FX use case: reduce cost of FX trading. 
• Cross-border payments use case: make cross border payments cheaper, faster, and more transparent. 
• These use cases could drive people to treasury work, shop online, make digital payments around the clock.
• Basic tokenization technology has become common knowledge, POCs have been done, white papers have been done. The remaining challenges will be: Cross currency, cross institution and cross blockchains. If these are solved, tokenization will be used a lot more in day-to-day treasury management, cash management and cross-border payments.

Scott O'Malia, Chief Executive Officer, International Swaps and Derivatives Association, Inc.

• ISDA is in the process of updating the FX definitions in our working groups today. And some of the things we're working through is making sure we digitise the documents and make sure that they're a golden source of information, constantly updated.
• We also work on legal documents and legal certainty in jurisdictions that also brings confidence and allows banks to intermediate and provide liquidity in those areas.
  
  

Conclusion:
While still in progression and facing hurdles, the adoption of tokenization in treasury management signals a significant leap forward. This will benefit not only financial institutions but also consumers by providing better pricing and more secure transactions. As industry leaders continue to collaborate and push the boundaries of what’s possible, we can anticipate a future where financial transactions are not only faster but also more transparent and cost-effective.

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Speakers:

• John O'Neill, Group Head of Digital Assets & Currencies, HSBC
• Kelvin Li, Head of Platform Tech, Ant International
• Kevin Barr, Head of Digital Cash and Innovation, BNY
• Scott O'Malia, Chief Executive Officer, International Swaps and Derivatives Association, Inc.

Moderator: