The Swift interbank communication network is working with Ethereum ecosystem developer Consensys to develop a blockchain settlement system.
According to a Monday announcement, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) is developing a blockchain in collaboration with over 30 financial institutions and Consensys. The initial focus is on developing infrastructure for “real-time 24/7 cross-border payments.”
One of the objectives of the new blockchain will be interoperability with “existing and emerging networks,” while also maintaining compliance. Consensys is tasked with developing the conceptual prototype in the first phase and defining the future work phases.
“The ledger will extend Swift’s financial communication role into a digital environment,” the announcement states. Swift added that the platform will support the exchange of tokenized assets, though the types of tokens will ultimately be determined by central and commercial banks.
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A new backbone for traditional finance
Blockchain, once described as a solution in search of a problem, is now being adopted rapidly by the traditional finance industry. Per the announcement, the vision for Swift’s new infrastructure is “a secure, real-time log of transactions between financial institutions.”
This would be important considering that Swift underpins most international payments in the modern financial ecosystem. According to the organization’s website, over 11,500 institutions in over 200 countries rely on the company’s infrastructure to process their transactions.
Swift does not directly move any money; instead, it provides an interbank communication network. It is meant to reduce errors and fraud risk — it is so pervasive that sanctions or exclusion from Swift can effectively cut a country or bank off from the global financial system.
“Because there are very few alternatives to SWIFT, financial sanctions that limit access to this network have become particularly costly for sanctioned entities,” according to a US Federal Reserve Bank of New York report.
Related: UK Finance pilots tokenized sterling deposits with six major banks
Swift expands blockchain exploration
This is not Swift’s first move into blockchain. In March 2024, Swift publicly recognized the value of tokenization and the shared ledger model. The organization sees a continuing role for its messaging layer within a blockchain-based financial system:
“Shared ledgers are not well-suited to carrying and storing high volumes of data due to the way data is synchronised across parties and the computing power required. This is where a messaging layer fits in.”
In November 2024, Swift provided its global financial messaging network to integrate tokenized fund processes with existing fiat payment systems. The initiative was carried out in collaboration with UBS Asset Management and blockchain oracle network Chainlink as part of the Monetary Authority of Singapore’s Project Guardian.
Also in late 2024, Swift announced that North American, European and Asian banks would begin digital asset trials on its network. The trials aim to explore how the banking network can provide financial institutions with unified access to “multiple digital asset classes and currencies.”
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