Citi Marks Live Transactions Using Swift’s Blockchain-Based Ledger

Citi says it has successfully processed live transactions on Swift’s blockchain-based ledger.

The banking giant announced the completion of this effort Thursday (Sept. 3), calling it a “significant milestone in its strategy to deliver always-on, cross-currency and interoperable payment solutions for its institutional clients.”

The announcement added that Citi is the first American bank to conduct live native ledger transactions, in collaboration with First Abu Dhabi Bank (FAB) and Oversea-Chinese Banking Corporation (OCBC).

“This pilot represents a crucial step in exploring how we can leverage the power of shared ledger technology to create a more efficient, interoperable, and always-on global financial system that supports both payments and collateral movement,” said Debopama Sen, head of payments, services for Citi. “Our active engagement in the design and execution of Swift’s ledger MVP ensures that our clients’ interests are at the forefront as we shape the future of interoperability between digital and traditional currencies.”

Citi said the completed transactions include the first to be processed in the Middle East region with FAB, and the first in the Southeast Asia region with OCBC. The banks called them an important step in showing the availability of distributed ledger technology in providing payments and settlements that aren’t limited by traditional cut-off times or weekend closures.

The release added that Citi expects to conduct similar transactions later this month, working with partners such as DBS and United Overseas Bank. It is part of what the bank calls a “focused, controlled proof-of-concept phase” set to end in December.

“The use of shared blockchain infrastructure to support the movement of tokenized deposits and more broadly, securities, will also create a more efficient market for instant cross-border payments and securities settlements,” Citi said.

Writing about the use of blockchain technology in the banking world last month, PYMNTS argued that tokenization is creating new intermediaries rather than killing existing ones.

“Tokenization exposes the fact that some friction exists because markets need it,” that report said. “Instant atomic settlement can eliminate the period in which one party has delivered an asset but has not yet received payment. That reduces settlement and counterparty risk, but it also removes time. Tokenization may make settlement programmable. It does not make liquidity programmable into existence.”