Founded in 2019, Fnality is a FinTech bringing together the safety and institutional quality of central bank money with the innovative functionality and resilience of blockchain technology. Their goal is to develop a global liquidity management ecosystem that empowers new digital payment models in both wholesale financial markets and emerging tokenized asset markets.
Fnality has been building a type of “private CBDC” made for wholesale banking transactions, where all the tokenized funds are backed by central bank currencies, and settlement happens in real time.
Who is Fnality?
Fnality International started its life as a pure research project to better understand how DLT could change financial markets. The project grew to include a consortium of financial institutions who wished to explore how Blockchain and Distributed Ledger Technology (DLT) could use tokenised cash assets to settle securities trades. In so doing it sought to alleviate many of the FMI challenges.
The initiative became known as the Utility Settlement Coin (USC) Project, with a core objective; the creation of a peer-to-peer digital cash asset to settle tokenised transactions with finality.
The payment solution needed to be:
- Available in multiple currencies to allow for greater efficiencies in managing fragmented liquidity.
- Capable of inter-operating across multiple business platforms, whether to support PvP or DvP settlement of financial transactions.
- A digital representation of money held in a central bank account to ensure banks could rely upon its value as they would fiat currency.
Having established that these aims were both theoretically and technically possible, the consortium members took a step toward building the system, to enable ‘on-chain’ payment, by investing in the creation of Fnality
“Tokenized Money”
Tokenization has become a significantly important development for digital payments in the banking sector for using decentralized ledger technology. Assets, such as currency, are represented as digital currencies, to enable banks to take advantage of blockchain technology. Due to the fact that Blockchain technology is protected by cryptographic keys, this makes them almost tamperproof and provide near-instant transactions, alongside an auditable record of historical transactions – this makes them perfect for the financial industry, and for the basis of “Digital Money”
Using blockchain technology, financial companies can reduce the time it takes to make international finance transfers of currency and assets from days or hours to minutes. It also reduces the amount of paperwork and human touch required and lessens the potential for error, because the record of the token transaction occurs on the blockchain network, which is immutable and can be audited afterwards