In a pilot, working with the shipping giant Maersk and a canal authority, Citi employed smart contracts to fulfill the same function as bank guarantees and letters of credit.
The largest U.S. bank Citigroup (C) announced on Monday that it has begun offering institutional clients a tokenization service utilizing blockchain technology and smart contracts for cash management and trade finance.
According to the bank, the smart contracts have the same function as letters of credit and bank guarantees.
In a pilot, the bank collaborated with a canal authority and the shipping giant Maersk in an effort to speed up the procedures, which are often drawn out and laborious due to the paperwork and manual procedures required.
“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 bank stated.
Citi predicted that the market for tokenizing digital securities will reach $4 trillion to $5 trillion in value by 2030 in a research from March 2023.
