Swift, implies the Society for Worldwide Interbank Financial Telecommunications is a Belgian cooperative society, which contains over 11,500 financial institutions and four billion accounts transversely two hundred countries and territories
Swift, the global provider of secure financial messaging services’ leading-edge innovation lays a path for digital currencies and tokenized assets to integrate seamlessly with the world’s existing financial network.
Novel technology continues to disrupt the financial outlook, but with numerous companies building diverse solutions, on different technology platforms, it is easy to visualize the digital financial ecosystem entailing digital islands of disjointed systems that would be able to interact with one another.
But the company’s revolutionary brand-new experiments have indicated how their existing infrastructure can be applied to enlist several distributed ledger technology platforms with each other, in addition to existing payment systems. The findings mean that the Central Bank Digital Currencies (CBDCs) and tokenized assets – the digital tokens that symbolize ownership of all or part of a stock, bond, or even liquid assets – could be incorporated into the financial network without initiating disruption
Digital currencies and tokens have massive potential to structure the path people would pay and invest in the future, states Tom Zschach, Chief Innovation Officer of Swift.
Zschach added that potential can only be accomplished if the various methodologies that are being explored could unite and work together. The company views inclusivity and interoperability as central pillars of the financial network and their innovation is the most important phase towards unlocking the potential of the digital prospect.
Swift’s strategy – applying CBDCs for cross-border payments
Nine out of ten central banks have been keenly delving into digital currencies, but their emphasis has remained on domestic usage. Interoperability is a cornerstone of Swift’s strategy and their experiments, conducted with Capgemini have achieved successful transactions between different CBDC networks, as well as with fiat-to-CBDC flows between these networks and a real-time gross settlement method.
The experiments showed that various CBDC networks across the globe can be interconnected not only with each other but with existing payment systems, all through a specific entry. SWIFT’s new transaction management capabilities could manage all inter-network communication.
To build the solution beyond, fourteen central and commercial banks, comprising the Banque de France, HSBC, Deutsche Bundesbank, NatWest, Intesa Sanpaolo, Standard Chartered, SMBC, UBS, and Wells Fargo – are now working together in a testing ecosystem to quicken its path to full-scale deployment.
Zschach said for CBDCs their solution would enable central banks to connect their networks easily and precisely to all the other payment systems on the planet through a single gateway, guaranteeing the swift and effortless flow of cross-border payments.
Unraveling the potential of tokenized assets
In a distinct set of experiments, the company has teamed up with Citi, Clearstream, Nothern Trust, and SETL, to evaluate how their existing infrastructure can be utilized as a separate access position to multiple tokenization platforms.
Tokenisation is a burgeoning market, but the World Economic Forum has projected it could achieve USD 24 trillion by 2027. The potential benefits consist of larger market liquidity and fractionalization, which could enhance access to investment markets for retail investors and facilitate institutional investors to develop greater portfolios.
The company’s experiments effectively conducted seventy scenarios, simulating market issuance and secondary market transfers of tokenized bonds, equities, and cash. The findings show that SWIFT can be utilized as a single point of entry to several tokenized networks, and their infrastructure can be applied for producing, transmitting, and redeeming tokens and revising balances between multiple client wallets.
Tokenization has immense potential when it bolsters liquidity in markets and expands access to investment opportunities, said Zschach. Swift’s existing infrastructure can guarantee these benefits can be achieved at the initial opportunity, by as many people as possible.
Enabling Instant, frictionless, interoperable cross border-payments
These experiments are part of the company’s wide-ranging innovation to provision their strategic focus on enabling instant, frictionless, and interoperable cross-border transactions for the advantage of the SWIFT community, which contains over 11,500 financial institutions and four billion accounts transversely two hundred countries and territories.
The company is transforming the underlying infrastructure of the global market to take on the precipitously changing needs of businesses and consumers. This comprises of providing a new standard for cross-border low-value payments, SWIFT Go, and services like Payment Pre-validation, which utilizes predictive intelligence to pre-check international payments for data inaccuracies before the payment has yet to be introduced.