SWIFT’s Role in a Tokenized Future on a Unified Ledger
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has been closely monitoring the advancements in financial technology (fintech) and how it may impact its own operations. After exploring various projects involving new technologies, SWIFT has now endorsed a unified ledger payment model. In its analysis, SWIFT specifically examined tokenization and the shared ledger model. It believes that having a common infrastructure can offer real-time balance information to all participants in the shared ledger. SWIFT emphasizes that messaging still has a crucial role, as shared ledgers are not designed to handle the vast amounts of data involved in transactions. Additional types of data are important for value-added services like AML, compliance, and trade reconciliation.
Rather than building a unified ledger from scratch, SWIFT proposes the creation of a state machine that reflects the current state of transactions and balances across institutions. This would be built on the ISO-20022 messaging technology that is already in use. The technology could be implemented on a blockchain or a centralized platform like SWIFT’s Transaction Manager. The International Monetary Fund and financial institutions participating in the Regulated Liability Network have already embraced unified ledger technology, and even the Bank for International Settlements has endorsed it. SWIFT, after considering several options, finally settled on this model.
In 2022, SWIFT collaborated with fintech company Symbiont in a pilot project to enhance its information delivery to corporate clients through Symbiont’s blockchain-driven Assembly platform. In a report in 2023, SWIFT advocated for its role as a “single point of access” to different blockchain networks, rather than embracing a unified ledger. It is essential to note that SWIFT’s influence in enforcing economic sanctions globally cannot be understated. In February 2022, at the onset of the Russian invasion of Ukraine, the European Commission ordered the removal of several Russian banks from SWIFT as a punitive measure.
3 thoughts on “SWIFT’s Role in a Tokenized Future on a Unified Ledger”
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SWIFT serving as a single point of access to different blockchain networks is a strategic move that simplifies the process for users. Way to provide convenience and ease for everyone!
SWIFT’s influence in enforcing economic sanctions doesn’t make up for their failure to adopt fintech advancements. They need to step up their game. 💔
SWIFT’s global influence in enforcing economic sanctions is impressive. Their actions during the Russian invasion of Ukraine demonstrate their commitment to upholding international standards.