Mastercard, US Banks Test Tokenized Asset Settlement

Mastercard is collaborating with US institutions to test shared-ledger technology for settling tokenized assets like commercial bank money.

In order to test shared-ledger technology with the intention of facilitating the common settlement of tokenized assets, Mastercard Inc. has embarked on a groundbreaking collaboration with some of the top institutions in the United States.

Mastercard Collaborates To Test Tokenized Asset Settlement

These assets include commercial bank money, Treasury-issued securities, and investment-grade debt securities. The endeavor, known as the proof-of-concept for the Regulated Settlement Network aims to replicate transactions in US dollars.

The ultimate objective as stated by Mastercard is to improve the speed and efficiency of international transactions while simultaneously reducing the risks associated with errors and fraudulent activity.

Transformative Potential of Ledger Technology

The implementation of ledger technology has the potential to bring about a transformation in the current financial transaction environment. At the moment, assets such as money from commercial banks and securities such as investment-grade debt are considered to be operating on distinct systems.

On the other hand, if we convert these assets into tokens that run on a distributed ledger, the settlement operations could occur on a uniform platform.

Mastercard conducted the previous test in late 2022 for twelve weeks, focusing on domestic interbank and international payments in dollars. This experiment builds upon that test.

Among the notable companies that are taking part in the trial are Citigroup Inc., JPMorgan Chase & Co., Visa Inc., Swift, and a number of other key players in the financial industry.

Organizations like the International Swaps and Derivatives Association and the Bank of New York Mellon Corporation will contribute their knowledge and experience to the trial’s success.

The current trial does not guarantee the technology’s use in commercial settings, despite financial institutions worldwide participating in trials of shared ledgers for tokenized transactions.

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