Blockchain settlement firm Fnality has tested connectivity with Adhara’s bank liquidity solutions as the last step on its road to launch. Fnality’s blockchain settlement tokens are backed by deposits with a central bank. Seventeen major financial institutions have invested in the company, and it is already designated as a systemically important payment system in the UK. It plans to launch this year.

Fnality’s vision from the beginning has been to improve bank liquidity. In these tests, Fnality provides the payment instrument and Adhara provides the liquidity management software. It’s no surprise that they integrate well, as Adhara is also a technology partner of Fnality.

The need for liquidity management

Fnality’s multinational banks hold cash or liquidity funds in branches around the world. With blockchain it is possible to manage liquidity centrally.

Additionally, tokenized payments allow for instant settlement. While that sounds great, if everything is settled instantly, at some point in the day, the cash requirement can be exceptionally high. Therefore, banks want to control the precise timing of payments and settle some of them intraday.

The tests showed that Adhara’s digital payment and liquidity centers interoperate well with Fnality’s payment systems.

“The centers allow them (banks) to internalize their intragroup liquidity management and settlement flows to optimize their intraday liquidity reserves and greatly improve their corporate treasury and payment offerings towards real-time, 24-hour services. day, 7 days a week, fully transparent and instant between currencies. ” said Julio Faura, Co-founder and CEO of Adhara.

Tried payments from corporate clients from Mexico in MXN to Singapore, received in SGD. The intermediary currency was USD managed through a centralized and tokenized USD liquidity center. And the Singapore bank was paid with Fnality USD.

Late last year, Fnality ran another trial. This time it was with HQLAᵡ, the DLT collateral management platform, where Fnality tokens were used to settle the cash portion. The banks involved were Santander, Goldman Sachs and UBS.

If Fnality tokens are to be used for on-chain settlement, they must interoperate with different types of ledgers. In the HQLAᵡ example, the collateral system uses R3’s Corda enterprise blockchain, while Fnality is based on Hyperledger Besu (Enterprise Ethereum). That test involved some interop work by Adhara, and now Adhara and R3 are developing a new interop project, Hyperledger Harmonia.