Citigroup, a prominent financial institution, has introduced a novel offering named Citi Token Services. This service converts customer deposits into digital tokens, facilitating immediate global transfers. This initiative seems to be a component of a broader effort to provide digital assets to institutional clients.
These tokens signify a stake or entitlement tied to the bank and are executed within a private blockchain exclusively owned and overseen by Citigroup. Reports from September 18 indicate that clients can seamlessly access this service through the bank’s existing systems.
Citi Token Services, the newly unveiled offering, will convert customer deposits into digital tokens, enabling swift global transfers. This announcement was made in a statement on Monday. The service is a part of the company’s treasury and trade solutions division, which, until now, has primarily concentrated on enhancing cash management and trade finance functions.
The service’s primary objective is to enhance international money transfers, which presently suffer from delays caused by varying systems, working hours, holidays in different countries, and outdated banking technology.
The concept of “tokenized deposits” or transferable digital coins is executed on the blockchain, ensuring immediate settlement. Users won’t need to establish their own cryptocurrency wallets and can conveniently access the service through the bank’s existing systems.
This launch comes on the heels of a trial conducted by Citigroup, the New York Federal Reserve, and other banks, involving digital tokens representing customer deposits. These tokens were settled through central bank reserves on a distributed ledger.
The trial effectively demonstrated to the Federal Reserve that digital dollars have the potential to enhance wholesale payments without altering the legal treatment of the deposits when utilizing blockchain technology.
Ryan Rugg, global head of digital assets at Citigroup’s treasury and trade solutions division, said:
“Our solutions within the Citi network are complemented by inclusive and open industry collaboration on initiatives like the Regulated Liability Network.”
Global head of the Citi’s services division, Shahmir Khaliq, said:
“The development of Citi Token Services is part of our journey to deliver real-time, always-on, next generation transaction banking services to our institutional clients,”
Another banking giant from U.S., JPMorgan is also trying to explore a similar solution for blockchain-based digital deposit token as these solutions are what helps make cross-border payments and settlements faster.