Tag: swift

Breaking: Swift, Chainlink, and Major Banks Achieve Multi-Blockchain Token Transfer

Swift, the global financial messaging service, announced on August 31, 2023, that it has successfully conducted a series of experiments to facilitate the transfer of tokenized assets across multiple blockchains. Collaborating with major financial institutions and Chainlink ($LINK), a Web3 services platform, Swift aims to solve the interoperability challenges that have been a barrier to the growth of tokenized asset markets.

Major banks involved are: Australia and New Zealand Banking Group Limited (ANZ), BNP Paribas, BNY Mellon, Citi, Clearstream, Euroclear, Lloyds Banking Group, SIX Digital Exchange (SDX), The Depository Trust & Clearing Corporation (DTCC).

Key Findings

Swift’s experiments revealed that its existing infrastructure could serve as a “single point of entry for financial institutions moving tokenized assets while leveraging existing secure infrastructure.” The cooperative’s efforts are part of a broader strategy to maintain secure, global interoperability in a fragmented financial ecosystem.

Tom Zschach, Chief Innovation Officer at Swift, stated, “Interoperability is at the heart of everything we are doing at Swift to facilitate the seamless flow of value across the world […] Our experiments have demonstrated clearly that existing secure and trusted Swift infrastructure can provide that central point of connectivity, removing a huge hurdle in the development of tokenization and unlocking its potential.”

The Challenge of Interoperability

Tokenization is still in its early stages, but 97% of institutional investors believe it will revolutionize asset management. One of the main challenges is the lack of interoperability between different blockchains where tokenized assets are managed. Financial institutions currently have to build connections to each platform individually, leading to “significant operational challenges and cost.”

Technical Insights

Swift collaborated with financial institutions such as ANZ, BNP Paribas, and BNY Mellon, among others. Chainlink was used to securely connect the Swift network to the Ethereum Sepolia network. The experiments involved transfers of simulated tokenized assets between wallets on the same public Distributed Ledger Technology network, between two wallets on different public blockchains, and between a public and private blockchain network.

Future Prospects

Swift will continue to work with the financial community to identify the most compelling use cases for tokenized asset adoption. The most promising avenue, in the near term, appears to be in the secondary trading of non-listed assets and private markets.

Implications

The experiments signify a step forward in solving the interoperability problem that has been a bottleneck for the broader adoption of tokenized assets. By providing a single point of entry, Swift could potentially lower operational challenges and costs for financial institutions.

Conclusion

Swift’s experiments mark a significant milestone in the quest for interoperability in the tokenized asset landscape. While the technology is still in its infancy, Swift’s efforts could pave the way for more efficient and cost-effective management of digital assets, thereby accelerating their adoption in mainstream finance.

Swift's CBDC Connector Enters Beta Testing with Global Central Banks

Swift, the world’s leading provider of secure financial messaging services, has announced the beta testing of its innovative Central Bank Digital Currency (CBDC) interoperability solution. This move comes as part of Swift’s ongoing efforts to bridge the gap between digital and fiat-based currencies.

Global Participation in Swift’s CBDC Initiative

Three central banks, including the Hong Kong Monetary Authority (HKMA) and the National Bank of Kazakhstan, are currently integrating Swift’s CBDC connector solution into their infrastructure for direct testing. This follows Swift’s commitment to develop a beta version after the first sandbox testing phase, where participants acknowledged the solution’s “clear potential and value.”

Furthermore, over 30 financial institutions worldwide are participating in the second phase of sandbox experiments. This phase aims to explore additional use cases such as trigger-based payments for digital trade platforms, foreign exchange models, and liquidity saving mechanisms. Notably, the Reserve Bank of Australia, Deutsche Bundesbank, HKMA, Bank of Thailand, and CLS are among the institutions involved.

Addressing the Fragmentation Concern

According to The Atlantic Council, 130 countries, accounting for 98% of global GDP, are currently exploring CBDCs. Nineteen G20 countries are in advanced stages of CBDC development, with nine already piloting their digital currencies. However, the primary focus on domestic usage could lead to a fragmented landscape across borders.

Swift’s response to this potential fragmentation is a concentrated effort on interoperability for digital currencies and tokenized assets. Their goal is to ensure these digital assets can seamlessly integrate into the financial ecosystem when deployed. Swift’s CBDC initiative, which started over 18 months ago, saw almost 5,000 transactions simulated between two different blockchain networks and existing fiat-based payment systems during its first phase.

Swift’s Vision for the Future of Digital Currencies

Tom Zschach, Chief Innovation Officer at Swift, emphasized the company’s focus on interoperability. He stated, “Our focus is on interoperability – ensuring that new digital currencies can seamlessly coexist with each other and with today’s fiat-based currencies and payment systems.” Zschach also highlighted the financial community’s recognition of Swift’s CBDC innovations, which aim to prevent “digital islands” while securely bridging current and future payment systems.

Swift is proactively embracing blockchain and CBDC, recognizing that blockchain has the potential to revolutionize its current system. As reported by Blockchain.News, Swift, in collaboration with major banks and Chainlink, announced successful experiments on August 31, 2023, to transfer tokenized assets across multiple blockchains. The initiative aims to address interoperability challenges hindering tokenized asset market growth. Swift’s infrastructure can act as a central point for financial institutions transferring tokenized assets, ensuring global interoperability. Tom Zschach of Swift emphasized the importance of interoperability and Swift’s role in facilitating global value transfer.

About Swift

Swift is a global member-owned cooperative, providing a platform for secure financial messaging. Connecting over 11,500 banking and securities organizations in more than 200 countries, Swift facilitates global and local financial flows, supporting trade and commerce worldwide. While it doesn’t hold funds or manage accounts for customers, Swift ensures secure and standardized financial message exchanges. Headquartered in Belgium, Swift maintains a strong presence in major financial centers globally, emphasizing its neutral, global cooperative structure.

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