SWIFT Launches New Drive to Boost Digital Finance Worldwide

In a historic move to accelerate and spread the benefits of digital finance across more than 200 countries and territories globally, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) announced Monday at the opening of this year’s Sibos conference in Frankfurt that it would integrate a shared blockchain-based ledger into its infrastructure.

Real-time, round-the-clock cross-border payments will be the primary focus at first, and the financial messaging cooperative builds a network that links more than 11,000 banks in more than 200 nations. Although the launch date has not yet been set, this ledger will lower the cost of cross-border payments globally once it is put into use.

The project is being carried out by SWIFT in conjunction with over 30 prominent financial institutions from 16 different countries, including TD Bank, Bank of America, BBVA, BNP Paribas, Citi, DBS, Deutsche Bank, Emirates NBD, First Abu Dhabi Bank, HSBC, JPMorgan Chase, MUFG, OCBC, Royal Bank of Canada, Societe Generale – FORGE, Standard Chartered, and BBVA. After financial institutions offer input on the ledger’s design, it will be further developed and tested.

Initially, SWIFT will work with Consensys, a blockchain software company, to create a conceptual ledger prototype that will facilitate interoperability between existing and future systems. “Upgrading existing rails while constructing future digital rails to increase infrastructure choice for the industry” is one of the parallel tracks used in the concept.

The shared blockchain-based ledger announcement is noteworthy for a number of reasons:

▪︎It demonstrates that SWIFT is poised to leverage the unique strengths of its network for the launch of a global blockchain ledger, and it is backed by most major global banks worldwide.

▪︎It is also a clear sign to all the various proprietary blockchain ledgers launched by other institutions that today’s plan is the result of a collective effort and will bridge and coordinate what each financial institution has done and is doing in this area.

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According to Lim Soon Chong, Group Head of Global Transaction Services at DBS Bank, their track record of developing instant cross-border payment capabilities and their early foray into blockchain-based payment solutions enable DBS to meaningfully support SWIFT’s digital shared ledger initiative.

SWIFT’s initiative goes a step further – it is interoperable with traditional correspondent banking rails, has a high transaction capacity within a secure environment, and is accessible by SWIFT’s global banking network. These characteristics are critical in supporting broad-based reach and adoption, and have the potential to form the backbone of a resilient and future-ready global financial infrastructure.

Credit: Global Finance Magazine