14 Banks, 5 Tokens: Fnality's Expansive Vision for Interbank Blockchains

With $63.2 million in fresh funding from 14 banks, Fnality is building tokenized versions of five major fiat currencies.

The digitized fiat would be fully collateralized by cash held at central banks and is meant to solve the "Cash on ledger" problem faced by other financial blockchain projects.

Fnality International is building the missing link in the banking blockchain.

Raised $63.2 million from 14 shareholder banks.

In a recent interview with CoinDesk, Ram and other bank and tech executives involved in Fnality shed some light on the previously secretive project's plans - starting with the role these tokens, still referred to as USC, would play in the enterprise blockchain ecosystem and the wider financial world.

Ram said he and his team "Definitely anticipate several banks producing their own individual coin for their own individual ecosystem." Although not Fnality's primary goal, there would still be a need for the equivalent of correspondent banking between an ecosystem of bank coins, he said.

Cash held in reserve at a central bank being brought onto a blockchain would cut through the Gordian Knot tying up each jurisdiction, making settlement instant, removing counterparty risk and freeing up capital, Fnality reckons.

Hyder Jaffrey, strategic investment and fintech innovation manager at Swiss bank UBS, one of Finality's shareholders, pointed to an important difference between so-called central bank digital currency projects and what Fnality does.

"Central bank digital currency is issued by the domestic central bank and hence backed by the central bank itself. The USC is commercial bank money. The design of it allows it to carry some of the characteristics of central bank money. Ultimately, how we are achieving that is through the cash collateral backing the USC sitting at the domestic central bank. It's a nuance but it's very important."

Lee Braine of the CTO office of the investment bank at Barclays, another Finality shareholder, pointed out that volumes in the wholesale interbank space that Fnality is targeting are very different from retail bank payments and as such the performance characteristics would also be very different.