Citigroup has introduced Citi Token Services, a private and permissioned blockchain designed to offer institutional clients cross-border payments, enhanced liquidity, and automated trade finance solutions. This new service will seamlessly integrate tokenized deposits and smart contracts into Citi's extensive global network.
Citi's Treasury and Trade Solutions (TTS), which holds banking licenses in over 90 countries, has successfully completed two pilot programs. One of these initiatives involved a collaboration with Danish shipping firm Maersk and an undisclosed canal authority. Together, they aimed to facilitate instant payments to service providers via smart contracts, dramatically reducing transaction processing times from several days to mere minutes. This innovative service effectively replaces traditional bank guarantees and letters of credit.
Ryan Rugg, the Global Head of Digital Assets at TTS, highlighted the second pilot program's capabilities. It enables customers to transfer liquidity between different Citi branches around the clock, effectively eliminating the friction associated with cutoff times and service window gaps. Rugg emphasized that Citi's solutions are enriched by fostering open industry collaboration, citing the Regulatory Accountability Network (RLN) technology, scheduled to launch in November 2022. Citi was among the major financial institutions that participated in a proof-of-concept led by the New York Fed, which concluded in July.
RLN infrastructure is groundbreaking as it consolidates assets and liabilities onto the same ledger to enable atomic settlement. This approach aligns with the concept of "unified ledger," which has gained prominence recently. The new service by Citi employs deposit tokens, representing tokenized commercial bank funds. JPMorgan is also exploring the implementation of deposit tokens. Notably, this technology is part of Project Guardian, initiated by the Monetary Authority of Singapore in May 2022, with JPMorgan as another participant.
