Global financial messaging company Swift just announced a massive upgrade to its infrastructure that includes the integration of a blockchain-based shared ledger. In the first stage, this new channel is to simplify and expedite cross-border payments. Essentially, this move made in conjunction with Consensys symbolizes how Swift plans to change the way it operates digitally on a larger scale.
Source: The Block
According to Swift, the conceptual prototype for the shared ledger is an idea developed jointly with Consensys, an Ethereum-centric blockchain company. The prototype aims to make transactions faster and more efficient, hence, operating 24/7 and using smart contracts to record, validate, and sequence payments.
To better ensure the security of tokenized transfers, Swift decided to blockchain technology. The main feature of the project is the prominence of the interoperability aspect, connecting the legacy financial system to decentralized banking community.
Over 30 financial institutions are on board with Swift to walk through the process and pointing out the potential impacts and benefits of the eventual release. Among the banks taking part are Banco Santander, Bank of America, BNP Paribas, and HSBC.
The institutions will play an instrumental role in testing the scalability, compliance, and integration features of the ledger, thus giving the nod that it can work without any hiccups across different financial networks while meeting Swift’s global standards of compliance.
It was reported last week that Swift has been testing Consensys’ Ethereum Layer 2 Linea, which is one of the scaling solutions for the blockchain ledger.
Speaking at Sibos conference in Frankfurt, the CEO of Swift, Javier Pérez-Tasso, underlined how the project was changing the payments landscape:
“Through this initial ledger concept, we are paving the way for financial institutions to take the payments experience to the next level with Swift’s trusted platform at the center of digital transformation.”
Given that the network of Swift includes more than 11,500 financial institutions, the decision of Swift to embrace blockchain is a signal of a big step towards the modernization of cross-border payments. By collaborating with Consensys and the leading global banks, Swift is gaining the advantage over traditional finance by becoming the middleman between the bank wire settlement systems and the blockchain, thereby paving the way for the faster and safer international transactions.
