QX Interoperability - v.0.7
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  • 👬Industry Initiatives
    • ISO Interoperability Framework
    • EEA Crosschain Interoperability Specification Suite
    • IEEE Standards for Blockchain Interoperability
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  • 🏦Use Cases
    • Payments/Digital Asset Transactions
      • Enable transfers of digital payment tokens
      • Conduct Compliant Cross-VASP Digital Asset Transaction
      • Swap NFT for Tokenized Bank Deposits
      • Enable Intra-Group Payments with Tokenised Deposits
    • Wholesale CBDC (wCBDC)
      • Enable Settlement with Simultaneous Delivery versus Payment
      • Facilitate Cross-Border Payments with wCBDC
      • Enable FX transactions to facilitate cross-border payments
      • Settle Crypto Derivatives using wCBDC
      • Access Liquidity via wCBDC
      • Settle Interbank Payments with wCBDC
      • Settle Interbank Payments with wCBDC (Acquirer-Merchant Settlement)
      • Make Property Payments with Tokenized Deposits
      • Provide FX Liquidity using wCBDC
      • Enable Payment versus Payment (PvP)
      • Crosschain digital bonds trades
    • Decentralized Finance (DeFi)
      • Aggregate Yields across Blockchains for Corporate Treasuries
    • Retail CBDC (rCBDC)
      • Provide Targeted Government Transfers (Government Vouchers)
      • Streamline Home Equity Lending
      • Provide Corporate Vouchers and Rewards
      • Make Milestone-Based Property Purchase Payments
      • Enable Traceable and Targeted Donations
      • Consumer Prepayments to Corporations
      • Enable Asset Transactions
      • Enable Cross-Border Remittances
      • Government Payouts
      • Managing Learning Accounts
    • Private Markets/Asset Tokenization and Trading
      • Tokenize and Trade Private Equity Fund Shares
      • Distribute and Settle Private Corporate Debt Issuance
      • Trade Employee Stock Grants as Digital Securities
      • Enable Secondary Trading for Non-Listed Assets and Private Markets
      • Automated Discretionary Portfolio Management with Tokenized Assets
    • Trade & Commerce
      • Support Tokenized Electronic Bills of Lading for Global Trade
      • Commercial Vouchers
      • Online Commerce
      • Programmable Rewards
    • DAOs
  • 🛠️Solutions Providers
    • Swift
    • Mastercard
    • Fnality
    • Quant Network
    • Ownera
    • Fujitsu
    • Deutsche Bank/Standard Chartered Ventures
    • Kaleido
    • Onyx/JP Morgan
    • Canton Network
    • Universal Digital Payments Network Alliance
    • Li.Fi
    • Visa
    • Partior
    • CLSNet
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    • Datachain
    • Ant Group
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    • IMF ?
    • BIS ?
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    • GroundX ?
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      • Audit and Compliance sub-layer
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      • Oracle sub-layer
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      • Discovery sub-layer
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      • Function call sub-layer
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      • Consensus sub-layer
      • Data transfer sub-layer
      • Security sub-layer
        • Identity and Authentication
        • Data Privacy
    • -
  • Protocol Providers
    • Chainlink
    • Axelar
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    • Comparison
  • Bridging Approaches
    • Bridges
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    • Oracle
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      • Hash Locking
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  1. Use Cases
  2. Wholesale CBDC (wCBDC)

Provide FX Liquidity using wCBDC

Use Cases

About

Use Case Category
Use Case Scope

wCBDC

This use case involves a commercial bank leveraging wCBDC to provide liquidity for FX transactions on a blockchain network.

This use case focuses on a bank acting as a liquidity provider. Instead of executing a cross-border payment, the bank deposits wCBDC to facilitate FX transactions for other participants. i.e. the bank acts as a liquidity provider for the FX market.

Description

Key Stakeholders:

Commercial Bank

Story:

  1. The commercial bank requests issuance of wCBDC in its domestic currency from the central bank.

  2. It transfers this wCBDC to an international blockchain network via bridging.

  3. The bank provides the wCBDC to an Automated Market Maker (AMM) on the network.

  4. In return, the bank receives pool tokens representing its share of the AMM liquidity pool.

  5. Other network participants can now exchange currencies via the AMM using the bank's wCBDC liquidity.

  6. The bank earns fees on the currency exchanges facilitated by its wCBDC liquidity provision.

Postconditions:

The commercial bank uses its domestic wCBDC to provide FX liquidity on a blockchain network. Other participants benefit from its liquidity provision.

Example


Liquidity provision by commercial banks to facilitate FX transactions. It is illustrated using the Swiss commercial bank. The Swiss commercial bank requests issuance of CHF wCBDC on the domestic platform (process I). It then transfers the CHF wCBDC to the international network using the bridge (process II). On the international network, the Swiss commercial bank provides liquidity to the AMM, ie it pays CHF wCBDC to the AMM in return for a corresponding amount of LP tokens (process III).

Source: BIS

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Last updated 1 year ago

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