Fnality, the international consortium of global banks focused on building a blockchain-based payment system to support the adoption of tokenised assets and marketplaces, has released a new feature that allows banks to programme funds for release upon receipt of proof of an event elsewhere.
Banco Santander, Lloyds Banking Group, and UBS all played a significant role in developing the new 'Earmarking' capability.
With Earmarking, institutions will be able to systematically programme when funds move, for example, in exchange for a specified asset, or a related market event.
A proof is a cryptographically signed piece of data representing specific information from another system, triggering the release of the £FnPS’s digital representation of central bank funds.
When an Earmark is in place prior to its release, the funds remain on the originating participant’s balance sheet at all times.
Fnality says the project has already been demonstrated in several proofs-of-concept, including for real-time settlement of tokenised securities, real-time cross-border FX swaps, and real-time repurchase agreements.
Michelle Neal, CEO at Fnality International says: “Fnality’s Earmarking feature is a landmark achievement, bringing smart contracts and programmability to payments in a digital representation of central bank money for the first time. This not only addresses existing challenges in wholesale financial markets but also paves the way for a range of innovative solutions that will shape the future of digital finance.”
John Whelan, managing director of digital assets at Banco Santander agrees: “One of the promises of institutional blockchain-based applications is ‘atomicity’ in that all the legs of a transaction either fulfil together or they all fail. There is no leg-risk. The concept of ‘earmarking’ as introduced by Fnality helps enable this feature in a way that can be truly interoperable with other DLT systems. Again, bringing us one step closer to the utilization of this tech at scale in the banking industry.”