Fnality completes 'world's first' blockchain payments at Bank of England

London: Fnality, a blockchain-based wholesale payments firm, said on Thursday that shareholders Lloyds Banking Group, Santander and UBS had completed the "world's first" live transactions that digitally represent funds held at a central bank.

Fnality seeks to bridge the gap between mainstream and digital finance to cut the time and cost of settling, managing collateral and making real-time wholesale payments for financial market transactions on a global scale.

"The creation of a new systemically important global payment system is a once in a generation event," said Hyder Jaffrey, managing director for principal investments and strategic ventures at UBS.

The inaugural live payments were made in sterling using an "Omnibus Account" at the Bank of England, introduced by the central bank in 2021 to spur innovation and competition in payments by allowing an operator to pool funds of participants.

Backing transactions with central bank money provides reassurance for institutions making payments.

Goldman Sachs, Barclays, BNP Paribas, BNY Mellon, CIBC, Commerzbank, DTCC, Euroclear, ING, KBC, Mizuho, MUFG Bank, Nasdaq Ventures, Nomura, Sumitomo Mitsui, State Street and WisdomTree are also shareholders in Fnality, signalling global backing to support Fnality's cross-border, round-the-clock ambitions.

"As we step into 2024, our focus sharpens on scaling up operations within a managed and approved framework as set out by the Bank of England, and steadily progressing towards unlocking new market use cases," Fnality UK CEO Angus Fletcher said in a statement.

The aim is to set up a series of regulated, blockchain based "institutional grade" payments systems for other core currencies, including the dollar and euro, overseen by their home central banks.

Fnality also plans to bring on board more participant banks,
and roll out related services such as digital securities
settlement, intraday repos, and intraday FX swaps.