Citi Treasury and Trade Solutions (TTS) has launched Citi Token Services, a blockchain and smart contract-based platform designed to modernize institutional financial operations. The new service aims to integrate tokenized deposits and smart contracts into Citi’s global network, offering 24/7 solutions for cross-border payments, liquidity management, and automated trade finance.
Citi Token Services has already shown its mettle in the trade finance sector through successful pilot programs. In collaboration with Maersk, a Danish shipping giant, and an undisclosed canal authority, Citi demonstrated the potential of its new platform to replace traditional bank guarantees and letters of credit. The pilot program utilized smart contracts to facilitate instant payments to service providers, thereby slashing transaction processing times from days to mere minutes. Marie-Laure Martin, Regional Treasury Manager for the Americas at Maersk, lauded the pilot’s innovative approach, highlighting its promising applications in trade finance.
A new dawn for cash management
Beyond trade finance, Citi Token Services is poised to redefine cash management for institutional clients. A second pilot program enabled seamless liquidity transfers between Citi branches around the clock. Ryan Rugg, Global Head of Digital Assets at Citi TTS, emphasized that the new service would mitigate issues related to cut-off times and service gaps, offering corporate treasurers a more efficient tool for global liquidity management.
The technology underpinning Citi Token Services is a private, permissioned blockchain, negating the need for clients to host a blockchain node. This development aligns with Citi’s broader strategy and risk appetite, as it continues to explore digital asset solutions that complement its existing suite of financial products and services.
Regulatory alignment and future prospects
Shahmir Khaliq, Global Head of Services at Citi, underscored the transformative potential of digital asset technologies within regulated financial systems. He noted that Citi Token Services is part of a larger initiative that includes work on the Regulated Liability Network (RLN), aiming for interoperable digital asset solutions across multiple banks. The RLN technology, introduced in November 2022, places assets and liabilities on the same ledger to provide atomic settlement, a feature that has attracted attention from large financial institutions, including the Federal Reserve Bank of New York.
As financial institutions grapple with the challenges and opportunities presented by digital transformation, Citi’s latest offering marks a significant step forward. By leveraging blockchain and smart contract technologies, Citi Token Services not only addresses the immediate needs of institutional clients but also sets the stage for the next generation of transaction banking services.