Citi and Fidelity International announced the proof-of-concept of an on-chain money market fund (MMF) with digital foreign exchange (FX) swap solution that demonstrates real-time settlement. It could enable investors to conduct seamless and real-time settlement of multi-asset positions in different currencies.
The tested solution — a tokenized MMF with an embedded digital FX swap — has the potential to enable faster, seamless management of treasury positions, eliminate delays and improve efficiency.
It could also enable investors to access higher yields on foreign cash funds while managing liquidity and FX risk in real-time. For example, a corporate treasurer holding non-USD working capital could invest in USD-denominated MMFs (USD MMFs) to enhance portfolio diversification and yield potential while ensuring continuous operational liquidity.
The proof-of-concept results from a collaboration between Citi and Fidelity International. It shows that the solution could run faster, programmable multi-asset transactions on-chain, which is currently not possible with traditional market infrastructure.
Citi and Fidelity International explored smart contracts to synchronize settlement of simulated FX swaps and issuance/redemption of simulated MMF tokens, leveraging interoperability protocols to connect separate networks. They also tested built-in fund token standards designed to ensure compliance with on-chain permissions throughout the entire fund lifecycle.