Swift, the global bank messaging network, said on Thursday that its native blockchain-based ledger is ready for trials. The network is intended to facilitate 24/7 internatioanl payments for banks while also supporting tokenized deposits. A total of 17 global banks have been onboarded for the trials that include — BNY, Citi, HSBC, UBS, and the First Abu Dhabi Bank (FAB) among others.
As part of the trials, the banks would be testing transactions using tokenised deposits to check if the brings visible improvement to liquidity efficiency.
Key details about the Swift ledger
Swift designed this shared ledger to let banks move customer funds round the clock — irrespective of weekends and time constraints.
“The shared ledger acts as a secure coordinator for tokenized bank deposits. Final settlement is then completed later through existing systems,” Swift noted.
This pilot will be the very first use case for Swift’s new ledger, which was designed and built over the period of nine months, based on the feedback of global banks.
Swift or the Society for Worldwide Interbank Financial Telecommunication was founded in 1973 and is headquartered in Belgium. Banks around the world use the Swift system to transmit transaction instructions and standardized payments. While the network does not actually move money, it serves as an encrypted messaging service that authorizes cross-border transfers.
The legacy network is preparing to position itself strongly into the next generation of finance by tapping the blockchain technology — that makes for the underlaying layer of stablecoins and cryptocurrencies.
Swift’s native blockchain will be integrated into its legacy network, which moves the equivalent of world GDP every two to three days across more than 200 markets, its announcement said.
“Our new ledger allows tokenised value to move across borders with the velocity and flexibility modern commerce expects, while maintaining the same high levels of resiliency, security, and compliance global finance requires,” said Thierry Chilosi, Chief Business Officer at Swift. “The strong support from banks shows the practical value of this approach.”
Meeting G2O’s goal
As per the Bank for International Settlements (BIS), the G20 nations have been wanting to make cross-border payments more transparent, cheaper, and faster by 2027. Swift believes that its ledger could advance the global financial industry to meet these G20 goals.
By the end of 2027, the G20 nations aim to have 75 percent of all cross-border payments to settle within one hour of initiation. The remaining 25 percent must clear within one business day.
While Swift is capable of moving money between international banks in under 10 minutes– hitting that 75 percent mark easily — what slows the process down is local banks processing the money into the actual recipient’s account. Once tested, Swift’s ledger could help banks move money 24/7, to bring speed and more efficiency to the transfers.
The G20 is also looking to slash the fees levied on international money movements and bring more transparency to the systems.
While blockchain transfers remove intermediaries like correspondent banks and allows direct, automated, peer-to-peer transfers — it makes cross-border transactions cheaper. Additionally, logs recorded on blockchain networks are permanent and immutable — which brings more transparency to the financial systems.
Ultimately, initiatives like Swift’s new blockchain ledger are designed to help the banking sector to hit these targets set by the G20 nations by 2027.
Swift said the ledger will expand in functionality and availability after the initial controlled pilot phase. An exact timeline for this has not been shared as of now.
“Leveraging Swift’s innovative blockchain based messaging infrastructure allows us to create interoperable payment solutions, powered by Citi’s network, enhances our ability to serve our global clients with greater speed, resilience and security,” said Debopama Sen, Head of Payments, Services, Citi as commenting on the development.
Banks deepening Web3 links
In a wider frame, more banks from around the world are foraying deeper into exploring what blockchain and its related financial technologies have to offer.
Earlier in June, banking giants like BNY, Standard Chartered, and the Commonwealth Bank of Australia joined a total of 140 fintech giants on a joint stablecoin effort.
On June 30, this mega-alliance launched OUSD — a Solana-built stablecoin pegged to the U.S. dollar. Under its community-first approach, all of its network partners will receive portions of the revenue generated by OUSD’s underlying USD reserves. The stablecoin could see a major push in the international remittance arena with platforms like Western Union, Nuvei, and Remitly joining the alliance.
