First Abu Dhabi Bank tests 24/7 cross-border payments with Citi

Dubai: First Abu Dhabi Bank (FAB) has completed live US dollar transactions with Citi using tokenised bank deposits, as banks test technology that could allow cross-border payments to operate around the clock.

The transactions were completed as part of Swift’s Ledger Minimum Viable Product (MVP). FAB said it is the first bank in the Middle East and Africa to reach this stage of the initiative.

The test brought together Swift’s existing payment messaging system, tokenised deposits and distributed ledger technology to see how they could work together in a live transaction.

Tokenised deposits are digital representations of money held in bank accounts. In this case, the deposits remained on the participating banks’ balance sheets rather than being transferred into a separate digital asset.

How transaction worked

Swift Ledger coordinated the payment commitments between the banks and recorded the amounts they owed each other. It did not hold or take custody of the actual funds.

The final settlement between the banks took place separately through established correspondent banking channels. This allowed FAB and Citi to test the new technology while retaining existing systems for managing liquidity, risk and settlement.

Swift is developing its Ledger initiative as banks and financial institutions build different systems for tokenised money.

One of the challenges is enabling these separate networks to communicate and transact with each other. The initiative is testing whether Swift can provide a common layer connecting them.

The FAB-Citi transactions also tested how regulated commercial bank deposits could support faster and programmable international payments available 24 hours a day, seven days a week.

FAB said it will continue working with Swift and other participating institutions on the next phases. These are expected to include greater connectivity between different systems, 24/7 cross-border settlement capabilities and programmable treasury services for corporate and institutional clients.