KEY HIGHLIGHTS
- The world's top banks are losing hundreds of millions annually due to idle assets and outdated collateral processes. This report quantifies the surprising daily cost of this friction and reveals how tokenization is turning that loss into a significant financial opportunity.
- As derivative markets move to a 24/7 model, the inability to move collateral outside of traditional banking hours creates immense risk. Discover how one major exchange is now settling variation margin calls on a Saturday night in minutes, making real-time risk management a practical reality.
- Traditional money market funds were too slow and cumbersome for modern margin requirements, until now. Learn how a new generation of tokenized funds is offering an unprecedented combination of mobility, yield, and programmability, solving the "idle cash" problem for institutions.
Collateral has always been behind the scenes in capital markets: essential, rarely glamorous, and until recently, remarkably resistant to change. That is now shifting fast.
Over the past year, we have watched the tokenization of collateral move from concept to practical reality. Institutions across the world are no longer asking whether digital collateral works, but how quickly they can put it to use. At Citi, we see this shift daily: clients moving from monitoring risk to genuinely managing it, in real time, across every time zone.
The case studies in this report tell that story concretely. From CME's move to real-time margining on Citi Token Services, to the mobilization of US Treasuries across a 24-hour cycle, to new eligibility pathways for tokenised money market funds, cryptocurrencies and even pre-IPO private securities, each example shows the same underlying pattern: legacy market infrastructure was built for daylight hours, but risk does not sleep. Tokenization closes that gap.
What excites us most is not the technology itself, but what it unlocks. Firms today over-collateralize and pre-fund simply to guard against operational uncertainty, locking up capital that could otherwise be put to work. Digital collateral removes much of that uncertainty, freeing firms to hold and deploy the assets that make genuine economic sense for their balance sheets, not just the ones that happen to be mobile during local business hours.
None of this is without its challenges. Legacy technology, established processes and understandable caution around new risk all remain real barriers to adoption. But as the examples in this report demonstrate, the industry now has a clear, proven path through them.
We are grateful to the institutions who shared their experiences for this report, and to the ValueExchange for bringing these insights together. We hope it provides a clear and practical view of where digital collateral stands today, and where it is heading next.
