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 an announcement on Thursday, Citigroup’s Citi Innovation Labs and the IDB have enabled multiple disbursements from the United States to a recipient in the Dominican Republic, using the LACChain blockchain network – an exclusive effort of the IDB’s LACChain regional program.
As part of the project, the IDB deposited tokenized funds denominated in US dollars into a Citi account and transferred the funds using digital wallets, explained the IDB blockchain specialist and LACChain technical manager Marcos. Allende. “After being symbolized, these funds were converted into the local currency – the Dominican pesos – with the exchange rate established by Citi,” he said.
The blockchain-based pilot enabled the IDB to provide instant traceability of transactions, exchange rates, and fees, potentially bringing a new method of cross-border payment 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 to the economies of our region and, more importantly, to the end recipients and families who receive remittances, ”noted Irene Hofman, CEO of IADB Lab.
The IADB is an international organization that supports the economic development, social development and regional integration of Latin America and the Caribbean. The IADB is actively exploring blockchain technology to fulfill its mission, with its innovation lab IDB Lab implementing its blockchain-focused LACChain program in 2019.
The open source LACChain runs on JPMorgan’s blockchain and Quorum smart contract platform.
Citigroup is no stranger to blockchain technology. In 2015, the bank developed three blockchain-based systems and a pilot cryptocurrency dubbed Citicoin to explore more efficient cross-border transactions.