DBS and Citi have completed a cross-border USD payment between Singapore and the United States using tokenized deposits on Swift’s blockchain-based ledger. The transaction, executed on September 5, took minutes, compared with the industry norm of up to two business days.
The payment is part of a pilot involving 17 banks, with Swift testing whether shared ledger infrastructure can support payment commitments from participating institutions around the clock.
At the Jackson Hole symposium in late August, BIS General Manager Pablo Hernández de Cos argued that tokenized deposits have a stronger case for everyday payments than stablecoins, while pointing to interoperability and inefficient cross-border payments as problems that still need solving.
Meanwhile, the two institutions have already been building tokenized deposit infrastructure, with Citi’s Token Services processing around $1 billion in transactions and DBS launching its blockchain-powered banking suite in 2024.
Their latest weekend payment shows that bank liquidity can move across borders without waiting for settlement windows, and if that capability scales, tokenized deposits could make existing liquidity more usable by reducing the time it spends waiting for clearing.
A New Way To Move Bank Money
Swift’s ledger is made to record and validate payment commitments between banks, while final settlement can still use existing infrastructure systems, which allows institutions to coordinate a payment continuously without needing the entire process to happen on-chain.
Unlike stablecoins, tokenized deposits keep payments within the banking system, making Swift’s approach less about creating a new form of money and more about connecting existing bank money through a shared digital network.
Notably, the DBS-Citi transaction follows HSBC and Standard Chartered’s first confirmed live payment on the ledger in August. Citi had also completed live transactions with First Abu Dhabi Bank and OCBC earlier in September. Together, the transactions show how the firms are testing whether tokenized deposits can move across institutions and currencies without being constrained by traditional settlement windows.
The Liquidity Effect Is in the Timing
Cross-border payments can involve several banks, each with separate cut-off times, funding requirements, and settlement arrangements. Reducing those delays could allow institutions to hold less liquidity against payments already in motion and deploy that capital more efficiently.
The Dallas Fed published a study in August on the implications of tokenized deposits for bank liquidity management and maturity transformation. It says distributed-ledger infrastructure can enable real-time settlement, while its adoption could change banks’ approach to liquidity management.
That connects settlement speed to liquidity efficiency, suggesting that tokenized deposits could make existing liquidity more usable by reducing the time it spends waiting for settlement. The effect becomes more important as payment volumes move across time zones, where a delay at one institution can tie up funds elsewhere in the chain.
The DBS-Citi deal is an early real-world test of whether that friction can be reduced. If such payments can be made across more banks, currencies, and time zones, then the benefits of faster settlement could extend beyond individual transactions to how institutions manage liquidity throughout the day.
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