Citi Payments Perspectives

13 Treasury and Trade Solutions Citi Payments Perspectives Global Initiatives Payments Infrastructure Developments Regional Developments (North America) Regulated Liability Network (RLN) update The Regulated Liability Network (RLN) is a proposal for a new multicurrency Financial Market Infrastructure (FMI) that encompasses central bank money, commercial bank money and e-money from regulated nonbanks. Traditional payment systems consist of messaging between institutions — the money is in the ledgers of the institutions at the edges of the network. In bitcoin the value is on the network itself. To fix frictions in payments, both domestic and cross-border, we need to solve for settlement, not just messaging. The RLN proposal is developed as an alternative to “narrow” CBDCs that are only denominated in central bank money, and much better than a situation in which every bank creates its own “coin.” In a white paper 7 published in December and discussed at a recent LinkedIn webcast event 8 SETL and AWS have provided early evidence of the technical feasibility of constructing a viable RLN. Previously, Citi, SETL, AWS and others demonstrated working prototypes of the RLN as part of the Global CBDC Challenge 9 hosted by the Monetary Authority of Singapore which recently released a report 10 on the initiative. The RLN community will continue to review, enhance, and socialize RLN concepts and testing in 2022. Settlement Token Customer Token Central Bank E-Money Issuer Regulated Liability Network Commercial Bank Figure: RLN (Source: Citi). In Other Words • New multicurrency FMI developed through a global public/private collaboration developed as an alternative to CBDCs and bank coins. • Tokenized regulated liabilities include central bank money, commercial bank money, and e-money from regulated nonbanks. • RLN would enable settlement between tokenized assets on a domestic and cross-border basis. Continued � Global Initiatives Financial Stability Board (FSB) Enhancing Cross-Border Payments Roadmap Emerging Payments and Digital Assets Payments Infrastructure Developments ISO 20022 SWIFT Transformation Instant Payments Financial Market Infrastructure (FMI) Interlinkage Initiatives Regional Developments (North America) Immediate Cross-Border Payments (IXB) TCH Request for Pay (RFP) Bill Pay Latest on Fed/CHIPS ISO Timelines Lynx — Canadian High-Value Payment System Glossary