DBS and Citi used tokenized deposits to move dollars between Singapore and the US in minutes via SWIFT's digital ledger, aiming to cut cross-border settlement delays and reduce the need for costly prefunding by corporate clients
For years, multinational companies have dealt with cash stranded in the wrong country-borrowing in one market while surplus funds sit unused in another. Now, banks are moving quickly to keep those balances on their own books as new digital payment systems threaten to draw away valuable corporate business.
Tokenized deposits in action
DBS and Citi completed the first publicly confirmed weekend USD transfer using tokenized deposits on SWIFT's digital ledger, settling in minutes instead of days.
Tokenized deposits are digital claims on funds held at a bank, with each token linked to a specific deposit account. Unlike stablecoins, which are backed by reserves held by an issuer and can trade at market-driven prices, tokenized deposits remain a direct liability of the bank. This keeps the traditional banking relationship in place for companies, while enabling programmable, near-instant settlement within supported networks. SWIFT acts as a connector, linking the digital ledgers of participating banks and handling regulatory compliance across borders, as reported by CoinDesk.
Why speed matters for corporate cash
Traditional cross-border payments force companies to keep extra cash-known as prefunding-in accounts around the world to make sure payments clear on time. For example, if a business needs to guarantee a $10 million payment two days in advance at a 5% annual borrowing rate, the extra cost for those two days is about $2,740, not counting any interest earned. Multiply that across many accounts and frequent payments, and the inefficiency adds up quickly.
SWIFT's digital ledger pilot, involving 17 banks across six continents, aims to enable 24/7 programmable settlement for both tokenized deposits and stablecoins, with a focus on reducing prefunding and unlocking working capital for corporates.
Banks defend their turf
The push for tokenized deposits is about more than technology. Banks earn revenue when companies convert currencies, borrow funds, or keep large balances. If stablecoin issuers or fintechs offer faster, cheaper ways to move money, banks risk losing both deposits and transaction fees. That's why 21 major financial institutions have announced plans for a new stablecoin business, aiming to launch a dollar product in the first half of 2027 and expand to other G7 currencies later.
These banks already have established relationships with corporate clients, who have completed onboarding, provided compliance documents, and expect support when issues come up. For many companies, the trust and service of a bank still matter-even as new digital money options appear. Citi's involvement in both tokenized deposit pilots and the stablecoin consortium shows a hedged approach: serve clients however they want to pay, but keep the relationship and the cash inside the banking system.
Limits and competitive pressure
Instant digital dollars do not solve every cross-border payment problem. Settlement speed is limited by the slowest part of the process. If a recipient's bank or local currency conversion service is closed, funds can still get stuck. Competing networks also need to work together, or companies will face the same fragmentation that complicates payments today. As reported earlier, stablecoin issuers are also looking for new markets and use cases, increasing the competition for corporate cash management.
SWIFT says its digital ledger pilot aims to connect different types of digital money-including tokenized deposits and stablecoins-across banks and countries. The goal is seamless, programmable settlement with regulatory compliance and customer protections. But the rollout is still limited, and banks have not set a timeline for wider commercial access.
Data from the Bank for International Settlements shows that global cross-border payment volumes topped $150 trillion in 2022, with most of that coming from corporate transactions. The cost and friction of moving money internationally remain a problem, with average fees for cross-border business payments ranging from 1% to 3% of the transaction value, depending on the route and method.
Tokenized deposits and stablecoins are both competing to become the main rails for global business payments. The outcome will depend not just on speed, but also on liquidity, interoperability, regulatory clarity, and how well they fit with existing treasury systems. For now, banks are betting that their client relationships and regulatory status will keep them in control of corporate cash-at least until a faster, cheaper alternative proves otherwise.
Tokenized deposits and stablecoins differ in structure and risk. A tokenized deposit is a digital claim on a specific bank, while a stablecoin is usually a claim on a separate issuer, often backed by a pool of reserves that can include cash, short-term securities, or other assets. This affects settlement and redemption rights, regulatory treatment, deposit insurance, and the risk of price changes. Companies weighing digital payment options need to consider these differences, looking at speed, cost, counterparty risk, legal protections, and operational complexity.
