Citi Is Working on ‘Citicoin’ for Cross-border Payments
International Business Times revealed that the global bank Citi is developing blockchains within the bank and test-coins to run across them. Ken Moore, head of Citi Innovation Labs, confirmed that the bank has been looking at distributed ledger technology for the last few years and has amassed a skilled team. They have built three blockchains and a test currency to run across them.
Headquartered in Manhattan, Citi is an American multinational banking and financial services corporation. As of January 2015, it is the third-largest bank holding company in the United States by assets and has one of the world’s largest financial services networks.
“We have up and running three separate systems within Citi now that actually deploy blockchain distributed ledger technologies,” said Moore. “They are all within the labs just now so there is no real money passing through these systems yet, they are at a pre-production level to be clear. We also have an equivalent to bitcoin up and running, again within the labs, so we can mine what we call a ‘Citicoin,’ for want of a better term. It’s in the labs, but it’s to make sure we are at the leading edge of this technology and that we can exploit the opportunities within it.”
Moore confirmed that Citi is discussing the opportunity to create a state-backed digital currency in a number of different countries with governments and regulators.
In May Bitcoin Magazine reported that Citi, persuaded that digital money adoption is inevitable, replied to a U.K. government call for information on digital currencies with a strongly positive position, and advised that the U.K. government should consider issuing its own digital money.
“Due to the potential benefits, we believe the adoption of Digital Money is inevitable,” noted the Citi document. “While we believe that the use of Digital Money is certain, the future of specific cryptocurrencies such as Bitcoin is less clear.”
The idea of a government-sponsored digital currency has been around for quite some time, with proposals for some kind of “Fedcoin” and “Eurocoin” being floated.Reportedly, IBM is also discussing adaptations of the blockchain technology to create a digital cash and payment system for major currencies with a number of central banks, including the U.S. Federal Reserve.
Moore indicated that Citi doesn’t intend to file a patent for its Citicoin technology, which is mostly based on open source components, and stated that Citi is mainly interested in the applications of blockchain technology to cross-border payments and remittances.
“Most of our efforts have been focused on payments; trade probably being a second runner,” he said. “Because we are a global network, a global bank, we can look for opportunities to use this technology to move money from country to country – country A to country B, across our network.”
Citi is also interested in “banking the unbanked” – providing financial services to people currently without access to bank accounts. The bank partnered with Safaricom, the largest mobile network operator in Kenya to process payments using just mobile phones.
Kenya reflects an African demographic of about 40 percent of the population holding a bank account, contrasted with 70 percent to 80 percent mobile penetration, said Citi manager Ireti Samuel-Ogbu. “You don’t need a bank account,” she said. “It goes straight into the mobile phone, it goes into a wallet.”