Swift Taps Consensys For Blockchain Settlement System

Swift Interbank Communication Network is working with Ethereum Ecosystem Developer Consensys to develop a blockchain payment system.

According to a Monday announcement, Interbank Financial Communications Association (SWIFT) around the world is working with more than 30 financial institutions and consumers to develop blockchains. The first focus will be on developing the “real-time 24/7 payments” infrastructure.

One of the purposes of the new blockchain is interoperability with “existing and emerging networks” while maintaining compliance. Consensys is tasked with developing conceptual prototypes in the first phase and defining future stages of work.

“Ledger extends the role of Swift’s financial communications into a digital environment,” the announcement states. Swift added that the platform supports the exchange of tokenized assets, but that the type of token will ultimately be determined by the central and commercial banks.

https://www.youtube.com/watch?v=rcjvfur93dk

Related: Swift declares a second sandbox connector test to test success such as CBDC

New backbone for traditional finance

Blockchain, once described as a solution for problems, is now being adopted rapidly by the traditional financial industry. According to the announcement, Swift’s new infrastructure vision is “secured, real-time logs of transactions between financial institutions.”

This is important given that Swift supports most international payments in the modern financial ecosystem. More than 11,500 institutions from over 200 countries rely on the company’s infrastructure to handle transactions, according to the organization’s website.

Swift doesn’t move money directly. Instead, it offers an interbank communications network. This is intended to reduce the risk of errors and fraud. This is very broad and sanctions or exclusion from Swift allow a country or bank to effectively reduce it from the global financial system.

“The financial sanctions restricting access to this network have been particularly expensive for authorized entities, as there are few alternatives to Swift to restrict access to this network,” according to a report by the Federal Reserve Bank of New York.

Related: UK Finance Pilot tokenized Sterling Deposits at Six Major Banks

Swift expands blockchain exploration

This is not the first move towards Swift’s blockchain. In March 2024, Swift publicly recognized the value of tokenization and the shared ledger model. Organizations see the ongoing role of messaging layers within a blockchain-based financial system.

“Shared ledgers are not suitable for carrying and storing large amounts of data, due to the way data is synchronized between parties and computing power. This is where the messaging layer fits.”

In November 2024, Swift provided a global financial messaging network to integrate tokenized fund processes with existing FIAT payment systems. The initiative was implemented in collaboration with UBS Asset Management and Blockchain Oracle Network Chainlink as part of the financial authorities of the Singapore Project Guardian.

Also, in late 2024, Swift announced that banks in North America, Europe and Asia would be launching digital asset trials on their networks. The trial aims to explore how banking networks can provide financial institutions with unified access to “multiple digital asset classes and currencies.”