The company will design an internal stablecoin linked to the US dollar. The objective is to execute international transactions quickly.
Wells Fargo, the US financial company, recently announced the beginning of its new development. It is working in a cryptocurrency for internal use that the bank will use as liquidity for international payments. In addition, it will create a remittance platform based on a system that the company lists as “Distributed Ledger Technology” (DLT).
With the central objective of making international payments quickly and safely, the digital platform will work with a special token developed by the company. The currency, called Wells Fargo Digital Cash, will make it easier for the company to “complete internal transfers of cross-border payment books within its global network, using digitized cash as a basis and for international locations to exchange the digitized cash with each other”. This shows that the token developed by Wells Fargo will be anchored to the US dollar.
The network distributed will be useful for the bank’s internal finances since with the DLT Wells Fargo will be able to develop a considerable amount of applications and tools that improve internal administrative and commercial processes.
The Director of the Wells Fargo innovation group, Lisa Frazier, argued that due to the increase in the use of technologies in the world’s banking services, the company sees this as a great opportunity to grow. Additionally, the idea is to overcome the obstacles that come with transnational transactions.
“We believe that DLT holds promise for a variety of use cases, and we are energized to take this significant step in applying the technology to banking in a material and scalable way. Wells Fargo Digital Cash has the potential to enable Wells Fargo to remove barriers to real-time financial interactions across multiple accounts in multiple marketplaces around the world”.
With the use of this DLT platform in the Wells Fargo banking system, it could be possible to accelerate traditional processes, avoid delays between comparative systems with other banks and improve processing speed in clearing and settlement systems or skip these steps completely. In addition to this, the platform could significantly improve the security of bank data and eliminate some risks.
These great benefits have captured the attention of important financial companies and represent multiple benefits with low costs and opportunities for growth and exploration to new digital markets.
Other companies are working to use blockchain with the aim to conduct international transactions quickly. A recent example is the association of the credit card company Mastercard with the blockchain company R3 to develop a blockchain system that allows international transactions with low cost, quickly and safely.
The official announcement of Wells Fargo shows the possibility of conducting the first stablecoin tests soon and with plans to be officially launched by mid-2020. It is expected to help complement dollar transfers, and that over time it can expand to the use of other digital currencies at the local Wells Fargo network level.
By María Rodríguez