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Home ยป Citigroup introduces token services catering to institutional clients.

Citigroup introduces token services catering to institutional clients.

Citi conducted a pilot using smart contracts to replace bank guarantees and letters of credit with Maersk and a canal authority.

by V. Sinclair
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Citigroup, a prominent U.S. banking giant, has recently launched a tokenization service utilizing blockchain technology and smart contracts for institutional clients. The service aims to facilitate cash management and trade finance processes. By leveraging smart contracts, Citigroup intends to replicate the functions of traditional bank guarantees and letters of credit.

To test the effectiveness of this new approach, Citigroup conducted a pilot program in collaboration with shipping company Maersk and a canal authority. The objective was to streamline and expedite processes that are typically burdensome and time-consuming due to the involvement of extensive paperwork and manual procedures.

The introduction of Citi Token Services addresses the demand from institutional clients for programmable financial services that are available round the clock. The service is designed to offer solutions for cross-border payments, liquidity management, and automated trade finance on a 24/7 basis.

Citigroup’s move aligns with its earlier prediction in a March 2023 report, where the bank anticipated that the tokenization of digital securities would evolve into a market valued between $4 trillion and $5 trillion by 2030. This forecast underscores the potential growth and significance of tokenization in the financial industry.

By embracing blockchain technology and smart contracts, Citigroup aims to enhance efficiency, reduce costs, and provide greater accessibility to financial services for its institutional clients. The utilization of tokenization has the potential to revolutionize various aspects of cash management and trade finance, offering a more streamlined and secure approach to conducting transactions in the digital era.

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