Backed by some of the world's largest banks, blockchain for payments consortium Fnality says it expects to reduce banks' intraday liquidity requirements by 70% when it goes live next year.
Developed in association with technology analytics company FNA, the ‘Fnality Participant Simulator’ has estimated the daily liquidity requirements reduction for banks when consolidating multiple existing payment rails into its blockchain-based payment system.
Trial runs with Banco Santander indicated that the possible intraday liquidity saving is between 33% - 70%. The Bank for International Settlements (BIS) recently suggested potential industry savings of $8bn on the assumption the top 100 Tier 1 banks were able to reduce their intraday liquidity requirements by just 25%.
By facilitating a ‘Single Pool of Liquidity’, Fnality hopes to provide banking shareholders with the ability to settle PvP as well as DvP transactions atomically and on a near-instant basis, empowering them to manage virtually the entirety of their cash and collateral portfolio from one place, rather than via the parking of capital across fragmented nostros, correspondents, domestic CSDs, and more.
Fnality CEO, Rhomaios Ram, says: "The digital disruption of legacy financial systems has drastically enhanced the way capital and funds can be traded. Of the technologies being integrated, blockchain is ideally placed to improve the efficiency of intraday liquidity, from reducing funding costs and payment delays to improved security."