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UBS Collaborates with Fnality for Blockchain-Based Dollar Payment Expansion

Introduction to Fnality International

Fnality International, a fintech firm based in London, has been making significant strides in revolutionizing global payments with blockchain technology. Founded as a research project, Fnality has grown into a consortium of global financial institutions, dedicated to leveraging Distributed Ledger Technology (DLT) for transforming financial markets.

The UBS-Fnality Partnership

UBS, a Swiss multinational investment bank, has been at the forefront of this innovation, collaborating with Fnality to implement blockchain-based payment systems. This partnership represents a milestone in the integration of traditional banking with advanced blockchain technology.

A New Era of Digital Transactions

Fnality’s payment system, initially supporting British pounds, has now expanded to include the US dollar. This development marks a significant step in the evolution of digital transaction models in wholesale finance and asset tokenization.

The First Phase: Sterling Fnality Payment System

The first phase of this initiative involved the Sterling Fnality Payment System (£FnPS), a pioneering effort bringing together banks like Lloyds, Santander, and UBS. The system operates with an account held at the Bank of England, connecting the blockchain network to the core UK payments infrastructure.

Expanding Horizons: Inclusion of US Dollar

The latest development sees Fnality extending its blockchain-based payment system to incorporate the US dollar, aiming to enhance transaction security, enable real-time transactions, reduce operational costs, and lower transaction fees.

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Fnality Fintech Logo

A Cautious and Strategic Approach

Despite the excitement surrounding these developments, Fnality is proceeding with caution. Their plan involves a series of scripted tests with participant banks to ensure reliability and functionality within the framework set by central banking authorities.

Liquidity Savings Mechanisms: A Key Feature

One of the innovative features of Fnality’s system is the Liquidity Savings Mechanisms (LSMs). These mechanisms, including queueing payments and enabling netting, aim to optimize liquidity management, which is crucial for the efficiency of instant settlements.

Use Cases and Practical Applications

Fnality’s system has four initial use cases, including interbank and intercompany payments within banks. These applications are selected to demonstrate the system’s capabilities in a real-world environment.

Global Interest and Investment

The initiative has garnered significant interest globally, with a Series B funding round raising approximately $96.4 million. This round, led by Goldman Sachs and BNP Paribas, included major players like DTCC, Euroclear, Nomura, and WisdomTree, reflecting the financial sector’s growing interest in blockchain solutions.

Conclusion: A Future-Forward Vision

As we head into 2024, the collaboration between UBS and Fnality International symbolizes a significant shift in the financial industry, bridging the gap between traditional and decentralized finance. This venture not only demonstrates the practical applications of blockchain technology in banking but also paves the way for a more efficient, secure, and interconnected global financial system.

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