SWIFT Launches Blockchain Ledger with Consensys and +30 Global Banks

One of the largest financial messaging network in the world, has made a historic announcement: SWIFT Launches Blockchain Ledger with Consensys and more than 30 major banks. The project is expected to revolutionize payments across borders and provide real-time, secure, and 24/7 settlement.

What SWIFT is Doing?

It is developing a blockchain-based shared registry to transform its payment infrastructure and be ready to enter a digital-first financial future. The ledger will enable banks to exchange tokenised assets and regulated value in real time, and retain the trust and compliance that is synonymous with SWIFT.

This new system is intended to run 24/7, unlike its current infrastructure, which has to run on the limitations of its traditional rails, which do not allow delays or time-zone constraints.

Source: crypto aman X

Who is SWIFT working with?

The project is composed of over 30 banks and financial institutions in 16 countries. The prominent players are BNY Mellon, JPMorgan Chase, Bank of America, HSBC, Citi, Deutsche Bank, Standard Chartered, Wells Fargo, and BNP Paribas.

SWIFT is also collaborating with Consensys, the blockchain software company that created the Layer-2 network of Ethereum , Linea. The conceptual prototype of the ledger will be designed by Consensys, which will introduce the high-level expertise of blockchain to the financial sector.

The Purpose of the Ledger

The common ledger will be a secure and electronic account of the financial exchange among international banks. The initial application will be real-time cross-border crypto payments , which will allow the transfer of funds across jurisdictions in real time.

Using smart contracts, the ledger will authenticate, order, and impose payment regulations, which will be obeyed and enforced. SWIFT sees this as a platform of interoperability between the old fiat system, a private blockchain, and a new public network.

Source: Official Page

Why This Matters?

SWIFT has been criticized over the decades because of its old infrastructure and slow settlement time. The new blockchain ledger will solve these issues directly as it allows always-on payments at a lower cost and increased transparency.

It also makes SWIFT a competitive threat to central bank digital currencies (CBDCs) and private stablecoin networks, which have become a possible threat to its hegemony.

Timeline and Development

The project starts with Consensys developing a conceptual prototype that will be tested by the network of banks. These trials will be used to provide feedback to guide the next stages and ultimate implementation.

This announcement is a follow-up to the SWIFT 2024 trials that demonstrated the practicality of blockchain-based settlement in a global financial setting through cross-blockchain token transfers.

SWIFT's Bigger Strategy

It is not swapping its old rails in one day. Rather, it is simultaneously modernizing its existing system and its digital infrastructure.

This two-track approach will allow financial institutions the freedom to proceed with using fiat rails as they prepare to embrace the digital economy.

Besides that, the company is implementing new regulations on the current systems to ensure faster and more predictable transactions.

Challenges

The success of the ledger is conditional on the ability to overcome regulatory and technical obstacles despite the promise. The regulators will be required to authorise tokenised transfers of value across jurisdictions, and developers will be required to ensure scalability and interoperability across different financial systems. However, resilience, compliance, and security will be the focus of its design .

The Importance of this Globally

Provided that it is successful, this initiative might transform world finance. It would help businesses to make trade settlements faster, consumers to receive cheaper remittances, and banks to be less dependent on intermediaries.

Having more than 200 countries and 11,500 institutions linked to the company, the blockchain ledger can establish a new international standard of instant, safe, and interoperable payments. Click to know the must-watch cryptocurrency market events occurred today .