The investment banking giant, Citigroup has announced the development of Citi Token Services in its trade finance ecosystem.
The novel solution is developed using blockchain technology and smart contract functionality to deliver digital asset applications for institutional clients. It will integrate tokenized deposits and smart contracts into Citi’s global network.
“Institutional clients have a need for ‘always-on’, programmable financial services and Citi Token Services will provide cross-border payments, liquidity, and automated trade finance solutions on a 24/7 basis,” the announcement blogpost said.
Citi’s proposed solution, under its institutional servicing arm Treasury and Trade Solution (TTS), works the same as bank guarantees and letters of credit offered in the trade finance ecosystem. Citi has worked with Maersk and a canal authority for this solution.
The solution is also integrated with the company’s global cash management pilot, which enables 24/7 available transactions between Citi’s branches
The project has already been piloted by the investment bank which enabled the transfer of tokenized deposits and provided instant payments using smart contracts. It is expected to reduce transaction processing time to minutes from days, cites the blog post.
“Digital asset technologies have the potential to upgrade the regulated financial system by applying new technologies to existing legal instruments and well-established regulatory frameworks,” said Shahmir Khaliq, the Global Head of Services.
Citi owns and operates the private/permissioned blockchain technology, and clients won’t need to host a blockchain node to use the services.
This move is another major milestone from the CitiGroup. In June, Citi also announced a partnership with Metaco for crypto custodian business amid the surge in adopting blockchain technology into traditional finance.
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