Citigroup has made a foray into the world of blockchain with its latest offering - Citi Token Services. This private and permissioned blockchain is poised to redefine cross-border transactions for institutional clients.
Citi Token Services is not just any blockchain. It is specifically designed to offer solutions in cross-border payments, liquidity, and automated trade finance. In essence, it incorporates tokenized deposits and smart contracts, seamlessly integrating them into Citi's vast global network.
Citi Treasury and Trade Solutions (TTS), boasting banking licenses across over 90 nations, took the technology for a test run through two pilot programs:
- In collaboration with the Danish shipping magnate, Maersk, and an undisclosed canal authority, they demonstrated the power of instant payments via smart contracts. This expedited process eliminated the prolonged waiting times traditionally associated with transactions, compressing them from days to mere minutes. Moreover, the innovative system sidesteps the need for bank guarantees and letters of credit.
- Another pilot highlighted the platform's capability to facilitate 24/7 liquidity transfers between Citi branches. This effectively removes inefficiencies arising from cut-off times and other service gaps. Ryan Rugg, TTS global head of digital assets, illuminated this achievement, highlighting Citi's intent to merge in-house solutions with broader industry collaboration initiatives, like the Regulated Liability Network (RLN).
Unveiled in November 2022, the RLN technology is revolutionary. Its importance was underscored when Citi joined other financial heavyweights in a proof-of-concept led by the Federal Reserve Bank of New York. This initiative, wrapped up in July, showcased the RLN's capability to synchronize assets and liabilities on a singular ledger, ensuring atomic settlements. This "unified ledger" concept is among a few innovative propositions seen recently.
The RLN isn't the only groundbreaking feature. Citi Token Services also harnesses deposit tokens, a form of tokenized commercial bank currency. Interestingly, this tech-savvy move isn't unique to Citi. Banking behemoth JPMorgan is also purportedly exploring deposit tokens. Notably, this technology was initially conceptualized in Project Guardian, initiated in May 2022 by the Monetary Authority of Singapore, where JPMorgan played a role.
Citigroup's leap into blockchain with Citi Token Services is emblematic of the banking industry's shift towards more streamlined, efficient, and futuristic financial systems. As giants like JPMorgan and others join the fray, the future of finance looks increasingly digital.
