Banking giant Citigroup has successfully completed a proof-of-concept for blockchain-based cross-border payments in collaboration with the Inter-American Development Bank, or IADB.
According to a Thursday announcement, Citigroup’s Citi Innovation Labs and the IADB enabled several disbursements from the United States to a recipient in the Dominican Republic, using the LACChain blockchain network — a proprietary effort by IADB’s regional program LACChain.
As part of the project, the IADB deposited tokenized funds denominated in U.S. dollars in a Citi account and transferred the funds using digital wallets, IADB’s blockchain specialist and LACChain technical leader Marcos Allende explained. “After tokenized, these funds were converted to local currency — Dominican pesos — with the exchange rate established by Citi,” he said.
The blockchain-based pilot enabled IADB to provide instant traceability of transactions, exchange rates and fees, potentially bringing a new method of making cross-border payments from the United States to countries in Latin America and the Caribbean.
“There are many applications of inclusive cross-border payments, such as official development assistance and international remittances. There is no doubt that they are extremely important for the economies of our region and, more importantly, for final beneficiaries and families receiving remittances,” IADB Lab CEO Irene Hofman noted.
The IADB is an international organization that supports Latin American and Caribbean economic development, social development and regional integration. The IADB has been actively exploring blockchain technology to fulfill its mission, with its innovation laboratory IDB Lab setting up its blockchain-focused LACChain program in 2019.
The open-source LACChain runs on JPMorgan’s blockchain and smart contract platform Quorum.
Citigroup is not a stranger to blockchain technology. Back in 2015, the bank developed three blockchain-based systems and a pilot cryptocurrency dubbed Citicoin to explore more efficient cross-border transactions.