Recent crypto news from CitiBank, the powerful banking institution, which will complete the conversion of its customers’ deposits into digital tokens, enabling them to be sent globally in real time.
See below for all the details.
Summary
Latest crypto news from CitiBank: the conversion of deposits into digital assets
As anticipated, according to the latest news, CitiBank has launched its token service, known as Citi Token Services, as part of a broader initiative to provide digital assets to institutional clients.Â
This innovative product will transform customer deposits into digital tokens that can be instantly transmitted around the world.
The important innovation was announced in a statement released on Monday 18 September, and is housed in CitiBank’s Treasury and Commercial Solutions division, which has focused its efforts on using this service to improve skills in liquidity management and trade finance.
Shahmir Khaliq, global head of the company’s services division, said the following on the matter:
“The development of Citi Token Services is part of our journey to provide real-time, always-on, next-generation transaction banking services to our institutional clients.”
We emphasize that this move represents the latest initiative by an established banking giant to offer so-called ‘tokenized deposits,’ which are transferable digital coins that act as a credit representative to banking institutions.
Basically, these tokens are managed via a blockchain, ensuring an instant settlement process.
As for Citigroup’s new offering, the company will rely on a private blockchain owned and operated by the bank itself, as officially stated.
This means that customers will not have to set up their own digital wallets, but will instead be able to access the service using existing banking systems.
Citigroup’s revolutionary solution for international money transfers
Citigroup has recently faced the challenge of cross-border financial transfers, a process that often takes several days due to the complexity of the systems used by banks and governments, as well as differences in time zones and holidays around the world.
This new initiative comes after Citigroup participated in a months-long test with a regulated network, in collaboration with a unit of the Federal Reserve Bank of New York and other global banks.
That test allowed banks to simulate the issuance of digital currency representing their customers’ funds before settling reserves at the central bank via a distributed ledger.
The result showed that so-called “digital US dollars” can significantly improve wholesale payments without compromising the legal treatment of deposits.
Ryan Rugg, global head of digital resources at Citigroup’s Treasury and Trade Solutions division, had the following to say on the matter:
“We will reduce friction related to transaction times and business day limitations through our solution within the Citi network, based on open industry collaboration such as the Regulated Liability Network.”
At the same time, JPMorgan Chase is exploring the idea of a blockchain-based digital deposit token to speed up cross-border payments and settlements.Â
Although they have developed much of the necessary infrastructure, the creation of such tokens will be subject to regulatory approval.
More news for Citigroup: smart contracts and more
Citigroup is also bringing digital offerings to an industry long plagued by paper and manual procedures, focusing initially on trade finance.
For example, in the shipping industry, the practice of bank letters of credit has been a solution to prevent container carriers from carrying large sums of money to pay suppliers such as those for fuel and supplies.
When a carrier refuels, Citigroup issues a letter of credit to the fuel supplier, who then presents it to the bank to obtain payment.
By implementing smart contracts, which automatically execute contracts when predefined conditions are met, transactions can be processed much faster, eliminating the need to handle paper documents.
Citigroup has already conducted tests of this new service in collaboration with a channel authority and AP Moller-Maersk, one of the world’s largest shipping companies. The pilot project demonstrated that the bank can instantly transfer tokenized deposits to suppliers based on smart contracts.
Marie-Laure Martin, regional treasury manager for the Americas at Maersk, said the following about the project:
“We are thrilled to have collaborated with Citi in the successful pilot testing of the collateral solution using digital tokens and smart contracts. This innovative solution offers promising prospects for the trade finance sector.”
