Global bank messaging network SWIFT is planning conduct live trials for digital asset and currency transactions across its global network, which connects over 11,500 financial institutions worldwide.
Starting next year, the trials are set to take place in North America, Europe, and Asia, the first time SWIFT pilots real-world transactions involving digital assets and currencies.
SWIFT has previously tested blockchain transactions in controlled environments. However, the upcoming trials will use an upgraded infrastructure capable of handling both digital and traditional currency transactions across borders.
The trials seek to show how financial institutions can transact seamlessly between different types of assets and currencies using their existing SWIFT connections.
The initiative builds on SWIFT’s recent experiments with web3 services firm Chainlink, where they showed how SWIFT could act as a single access point for multiple public and private blockchain networks, including those used for tokenized assets and central bank digital currencies (CBDCs).
SWIFT’s head of innovation, Tom Zschach, said: “For digital assets and currencies to succeed on a global scale, it’s critical that they can seamlessly coexist with traditional forms of money. With our vast global reach, we are uniquely positioned to bridge both emerging and established forms of value, and we’re now focused on demonstrating this in real-world, mainstream applications.”
Zschach added that a key goal of the trials is to address the lack of interoperability among various digital platforms, which SWIFT sees as a barrier to the widespread adoption of new forms of value.
SWIFT also plans to launch a new platform within the next one to two years to connect central bank digital currencies (CBDCs) currently under development with the existing financial system.
With around 90% of the world’s central banks exploring digital versions of their currencies, there is a push not to fall behind the advancements made by bitcoin and other cryptocurrencies. However, technological complexities pose a challenge.
SWIFT highlighted that the network’s latest trial, which included a diverse group of 38 central banks, commercial banks, and settlement platforms. The joint effort focused on interoperability among different CBDCs, even if they are built on varying technologies.
The trial also explored the potential for CBDCs to be used in complex trade or foreign exchange payments and for transactions to be automated, which could expedite processes and reduce costs. The successful results have prompted SWIFT to consider productizing the new platform within the next 12-24 months, moving from experimental stages to reality.
