The Society for Worldwide Interbank Financial Telecommunication (SWIFT) will start trials of digital asset transactions across its global messaging network.
SWIFT Chief Innovation Officer Tom Zschach stated that the organization’s goal is to build a network that supports both emerging and traditional payment systems. However, the current landscape is fragmented across a considerable amount of networks and currencies.
“As Zschach said, there are likely to be multiple blockchain networks that prevail from these early stages,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “The key to a successful trial is focusing on interoperability and successful execution—scaled at live higher volumes—across various institutions, types, and networks.”
Coexisting with Currencies
Zschach emphasized that the goal for digital assets and currencies is to coexist with traditional currencies, not replace them. SWIFT’s trials will involve financial institutions from North America, Europe and Asia and will cover “multiple digital asset classes and currencies,” though specific banks and asset types weren’t detailed.
SWIFT said it has already proven its ability to transfer tokenized value across blockchains, link CBDCs, and integrate crypto and cash networks. These trials will focus on providing banks with a single hub for handling various currencies and digital asset types.
The Feedback Loop
Cross-border payments have long been a challenge, and SWIFT has often been seen as a leading contender to spearhead a better cross-border system. The organization recently joined Project Agorá, a collaboration between leading financial institutions and multiple central banks, facilitated by the Bank for International Settlements.
The project’s goal is to explore how tokenized commercial bank deposits can be integrated with CBDCs on a single platform.
“Swift has worked with multiple blockchains, central and commercial banks, and other major payment players for several years,” Hugentobler said. “They’re continuing to push these types of trials to locate specific weaknesses and collaboratively build out the best fit and most secure solutions. This feedback loop has been going on for years, so it’s just a matter of time before they (and other major players) decide on the best solution and implement near-real-time global payments.”
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Arwen Volkov, A graduate of the University of St. Gallen in Switzerland with a degree in International Finance, Arwen specializes in sustainable finance and green investments. She began her career at an investment bank in London, where she developed financing models for environmentally friendly projects. Known for her analytical and strategic thinking skills, Arwen is a sought-after financial consultant. In her spare time, she mentors fintech startups, contributing to their growth strategies. She is also a nature enthusiast and an amateur photographer.
