Swift actively embraces blockchain technology, providing a single point of access for financial institutions to transfer tokenized assets.

The global cross-border payment messaging system leader Swift is once again setting the standard for financial innovation by demonstrating through joint experiments with Chainlink and multiple financial institutions that its infrastructure can seamlessly facilitate the tokenization of value across multiple public and private blockchains.

Why is Swift so Important?

Swift is the leading global cross-border payment messaging system, serving over 200 countries and regions with more than 11,500 participating financial institutions, connecting a total of 4 billion accounts worldwide. Most people may only encounter the term "Swift code" when making international bank transfers, which is an 8-11 character code established by Swift, indicating the country, city, bank, and branch you are in, used to identify global banks and financial institutions, in simple terms, a "bank identification code."

However, Swift does more than just establish Swift codes. It has developed a universal language for international financial message transmission, using standardized formats to ensure accurate and machine-readable information exchange between institutions. It is currently the most secure, cost-effective, and reliable channel for financial message transmission related to payments, securities, funds, and transactions worldwide. All financial institutions engaged in international transactions use Swift, and its various message standard formats allow specialized Swift operators to easily convey transaction details with the most concise text. Frankly speaking, even though I have worked in a bank for over a decade, due to no direct business need, when I see a Swift message, it's like looking at alien language, triggering an immediate system crash mode. This is also one of the reasons why Swift is not easily cracked.

Swift is indeed crucial as it serves as the standard setter at the bottom of financial institutions, processing over 40 million transactions daily, influencing the future direction of finance with every move. Otherwise, the U.S. and Europe would not have vigorously demanded Swift to exclude Russian banks from its system after the Russia-Ukraine war. Once Swift is lost, international transactions are disrupted, making it difficult to proceed through traditional channels.

Swift Embracing Blockchain Technology

As blockchain technology matures in recent years, many question the necessity of Swift in the future, but can a leader be easily replaced? Swift is proactively embracing new technologies. The "Connecting the Digital Islands" project, cultivated for many years, brought good news in March this year. Swift collaborated with multiple partners to integrate distributed ledger and blockchain technology with traditional financial networks to facilitate seamless cross-border transactions for different CBDC systems on various platforms.

Swift has recently announced a series of successful experiments, demonstrating that its infrastructure can seamlessly facilitate the tokenization of value across multiple public and private blockchains. These findings have the potential to eliminate significant friction hindering the growth of tokenized asset markets and enable them to expand globally more rapidly.

Tom Zschach, Swift's Head of Innovation, stated:

Interoperability is at the core of what we do at Swift, facilitating the seamless flow of global value in an increasingly fragmented landscape. To unlock the potential of tokenization, institutions need to seamlessly connect with the entire financial ecosystem. Our experiments clearly show that our existing secure and trusted Swift infrastructure can provide a central point of connection, removing significant barriers to the development of tokenization and unleashing its potential.

The collaborating institutions include:

Banks: ANZ, BNP Paribas, BNY Mellon, Citibank, Lloyds Banking Group, SIX Digital Exchange SDX

Clearing Houses: Clearstream, Euroclear, The Depository Trust & Clearing Corporation

Cryptocurrency data provider Chainlink is used as an enterprise abstraction layer to securely connect the Swift network to the Ethereum Sepolia network, while Chainlink's Cross-Chain Interoperability Protocol (CCIP) achieves full interoperability between source and target blockchains.

This once again proves that Swift can provide a single point of entry for financial institutions to transfer tokenized assets, while leveraging existing secure infrastructure to prepare for the takeoff of future tokenized assets.