The future of digital money is shifting from messaging to settlement, according to industry leaders at Citi’s recent Digital Money Symposium. As global financial institutions grapple with the evolution of cross-border payments, one concept is gaining traction: the Regulated Liability Network (RLN) — a shared infrastructure where central bank digital currencies (CBDCs), bank deposit tokens, and regulated stablecoins could coexist and settle instantly.
Tony McLaughlin, Citi’s digital assets strategist and the original architect of the RLN concept, made a bold declaration during the panel: “Messaging is done” when it comes to modernizing payments. This statement underscores a growing consensus that while payment messaging has become highly efficient, the real bottleneck lies in settlement.
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The Myth of Slow SWIFT Payments
McLaughlin began by clarifying a common misconception: many blame SWIFT for slow international transfers. However, he emphasized that SWIFT is not responsible for settlement — it only handles messaging. The actual delays occur in the back-end settlement process, where banks reconcile transactions across time zones, regulatory frameworks, and legacy systems.
“People think SWIFT is slow,” McLaughlin noted. “But SWIFT isn’t the problem. It’s the settlement layer that lags behind.”
This distinction is critical. While SWIFT ensures secure communication between banks, the actual movement of funds depends on correspondent banking relationships, clearinghouses, and operational hours — all of which introduce friction.
The RLN aims to eliminate this friction by building a unified settlement infrastructure using shared ledger technology. Unlike traditional systems, the RLN would enable delivery versus payment (DvP) — ensuring that assets are exchanged only when corresponding payments are made, reducing counterparty risk.
Why Settlement Is a Legal, Not Just Technical, Challenge
One of the most insightful points McLaughlin raised was that settlement is a legal construct, not merely a technological one. Even if a blockchain records a transaction instantly, legal finality — the point at which ownership is irrevocably transferred — requires regulatory recognition and institutional agreement.
“To achieve true settlement,” he explained, “you need an infrastructure that supports multiple currencies, assets, and jurisdictions — something that doesn’t exist today.”
This gap highlights why projects like the RLN are essential. They’re not just about upgrading technology; they’re about creating a new financial architecture where legal finality and technical execution align seamlessly.
SWIFT’s Role in the Regulated Liability Network
Sitting beside McLaughlin was Nick Kerigan, SWIFT’s Head of Innovation, reinforcing the messaging giant’s commitment to evolving beyond its traditional role. SWIFT is actively participating in RLN trials led by the New York Federal Reserve, testing how existing messaging strengths can integrate with emerging settlement solutions.
Kerigan acknowledged that while messaging is now fast and reliable, “the settlement part needs to be as fast, efficient, and available 24/7 as the messaging piece.” He posed a key question driving the initiative: Could we have an end-to-end system that works just as well on a Sunday night as it does on a busy Wednesday afternoon?
SWIFT’s recent CBDC interoperability trials demonstrated progress in bridging old and new financial systems. But the ultimate goal isn’t just compatibility — it’s convergence. The vision is a world where the message is the payment, and settlement occurs instantly.
However, geopolitical realities complicate global adoption. As SWIFT has been used as a tool for financial sanctions, some nations — notably China — are investing heavily in alternative networks like MBridge, a DLT-based cross-border payment system for digital currencies. This underscores the need for neutral, inclusive infrastructures like the RLN.
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Beyond Settlement: The Full Payment Experience
Mastercard’s Martin Etheridge offered a broader perspective, reminding attendees that payments involve more than just settlement. Functions like anti-money laundering (AML) checks, consumer protection mechanisms, compliance protocols, and network onboarding standards are equally vital.
“Settlement is just one part of the payment experience,” Etheridge said. “What matters is how all these pieces come together to serve customers.”
Mastercard, too, is involved in the New York Fed’s RLN experiments, reflecting a collaborative approach across traditional finance, fintech, and central banking institutions. Each participant brings a unique viewpoint — whether it’s risk management, user experience, or scalability — helping shape a more robust and inclusive system.
The Technology Debate: Blockchain or Not?
While much of the discussion centered on blockchain and distributed ledger technology (DLT), panelists were careful not to lock into any single solution. McLaughlin referred to “potentially using shared ledger technology,” leaving room for both decentralized and centralized models.
Etheridge reinforced this flexibility: “The business case should drive the technology choice — not the other way around.”
Currently, blockchain firms SETL and Digital Asset are technical partners in RLN development. However, Digital Asset’s DAML platform can operate over centralized databases as well, indicating that the focus is on functionality rather than ideology.
This pragmatic approach increases the likelihood of real-world adoption, especially among institutions wary of fully decentralized systems.
Core Keywords:
- Regulated Liability Network
- digital currency
- payment settlement
- blockchain technology
- CBDC
- SWIFT
- tokenized assets
- shared ledger
Frequently Asked Questions (FAQ)
Q: What is the Regulated Liability Network (RLN)?
A: The RLN is a proposed financial infrastructure that enables central banks, commercial banks, and regulated entities to issue digital liabilities — such as CBDCs and bank deposit tokens — on a shared network for instant settlement.
Q: Why does Citi say ‘messaging is done’ in payments?
A: Because current messaging systems like SWIFT are already fast and efficient. The real challenge now lies in upgrading the settlement layer to match that speed and availability.
Q: Is the RLN based on blockchain?
A: It may use shared ledger technology, including blockchain, but the final design will depend on business needs rather than technological preference. Centralized databases could also play a role.
Q: How does RLN differ from SWIFT?
A: SWIFT handles payment messaging, while RLN aims to be a settlement layer. RLN could enable instant, 24/7 clearing across currencies and institutions without relying on correspondent banking.
Q: Who is involved in developing the RLN?
A: Key participants include Citi, SWIFT, Mastercard, the New York Federal Reserve, SETL, and Digital Asset. The project emphasizes collaboration between public and private sectors.
Q: Could RLN replace traditional banking systems?
A: Not immediately. RLN is designed to complement existing systems while enabling innovation. It supports coexistence between legacy infrastructure and next-generation digital money formats.
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The race to define the future of money is accelerating. With pioneers like Citi pushing bold ideas like the Regulated Liability Network, the financial world stands on the brink of a transformation — one where instant settlement isn’t the exception but the standard. As messaging fades into the background, settlement takes center stage in shaping a faster, fairer, and more inclusive global economy.