Chainlink has joined a banking union called Project Pangea, involving 47 banks and related institutions in Korea and Europe. The project, which is planned to be tested within the next 12 months to stabilize currency to complete the settlement of cross-border foreign exchange transactions, aims to compress the traditional process, which usually takes two working days, to near real time completion.

Focus Korea-Europe Trade Channel

The project is currently focusing on the trade settlement corridor between Europe and Korea. The report cites project sources that the amount of goods and services processed by the corridor exceeds $150 billion per year. Participating agencies want to stabilize the currency through a link between the euro and the Korean Won, reduce the time in transit for funds and reduce the risk to their counterparts and settlement in cross-border transactions.

Test Synchronization Mode

Project Pangea will assess a “payment-to-payment” synchronized settlement whereby the delivery of both currencies is completed at the same time or not at the same time. This would avoid situations where one party has paid and the other party has not yet delivered.

It is envisaged that the bank will test the near real-time exchange between the euro and the Korean dollar. If the programme landes, it is expected that the working capital that an enterprise is taking on in cross-border transactions will be released more quickly and the time of arrival will be reduced.

  • The traditional foreign exchange settlement cycle is usually T+2
  • Project goal is to move settlement closer to T+0
  • The test assets are the regulated euro and the Korean dollar stabilization currency

Compatible Swift with ISO 20022

The project does not require banks to directly adapt existing payment systems. Project Pangea was designed as an intermediate layer to allow banks to continue using the Swift Information Network and ISO 20022 standards and to convert the instructions into a chained settlement network.

According to reports, the chain settlement will be completed through the Pangea L1 network, and Chainlink will be responsible for providing the infrastructure to connect the traditional financial system to the chain executive level. Instead of requiring agencies to build a new network from the ground up, projecters would like to use this to lower the bank access threshold.

47 banks participating in testing

In addition to Chainlink, the Union includes the European Euro Stabilization Currency Union Qivalis and the Korean Banking Union UniKA. It is reported that 37 European banks are behind Qivalis and that UniKA represents more than 10 Korean commercial banks. The total amount of assets managed by the relevant agencies exceeds $10 trillion.

Chainlink, Vice-President of Asia-Pacific and Middle East, Niki Ariyasinghe, stated that the project was not in the conceptual validation phase, but aimed at facilitating the landing of real transactions within a compliance framework. As currently planned, the Union hopes to move forward with the real-time transaction test in the coming year.

Additional information:For a possible external comparison with Ripple ' s cross-border payment layout, Chainlink argued that its role was closer to that of a technology provider, with a focus on enabling the existing banking system to access a stable currency settlement capacity without significant infrastructure replacement.