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The Central Bank of Bahrain anticipates that its digital currency partnership with JPMorgan and Bank ABC would lead to the establishment of a CBDC.
Bahrain, the third-richest Arab country, is collaborating with American investment bank JPMorgan Chase on a digital currency settlement pilot project.
The Central Bank of Bahrain reported on Tuesday that it is now working with JPMorgan and the Arab Banking Corporation BSC, or Bank ABC, on a pilot scheme to develop an instant cross-border payment solution based on digital currency technology.
The new digital currency pilot would include moving funds from and to Bahrain in US dollars for payments from sellers and vendors in order to reduce settlement processing time. The central bank stressed that the proposal to expand the partnership to a central bank digital currency should go forwards.
“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.
JPMorgan’s vice chair of wholesale payments, Ali Moosa, stated that the latest partnership includes the company’s digital currency-focused subsidiary, Onyx. The product, which was piloted in 2017, was initially known as the Interbank Information Network before being 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 executive noted.
JPMorgan has actively promoted its blockchain infrastructure capabilities as a means of collaborating with multinational authorities on cross-border payments. JPMorgan joined forces with Singapore’s largest bank, DBS, and state investment firm Temasek to initiate a new blockchain partnership focusing on foreign payments and interbank transactions in late April. Previously, the bank given its Liink technology to an Indian government-backed bank in order to lower transaction costs and boost cross-border payments.