SWIFT has reportedly assembled a consortium featuring BNY Mellon and BNP Paribas for an essential experiment aimed at transferring its core messaging system to ConsenSys’ Ethereum layer-2, Linea.
Summary
- SWIFT and banks like BNY Mellon and BNP Paribas are reportedly trialing blockchain messaging on Consensys’ Ethereum layer 2, Linea.
- This initiative follows SWIFT’s 2023 tokenization trials and supports future digital asset tests scheduled for 2025.
- A successful deployment could enable faster settlements, reduced costs, and enhanced cross-border payment frameworks.
According to a Sept. 26 report from The Big Whale, the global financial messaging cooperative has launched a development project with over a dozen major institutions to explore transitioning its core messaging framework on-chain.
A source from a participating bank indicated that the project is a multi-month effort, describing it as a precursor to a significant technological overhaul for the interbank payments sector.
The choice of ConsenSys’ Linea was reportedly motivated by its focus on privacy through advanced cryptographic proofs, a vital feature for adhering to strict bank compliance requirements.
SWIFT’s blockchain journey has been years in the making
Last year, SWIFT announced plans for live trials of digital asset and currency transactions across its network set for 2025. The current project with Linea seems to lay the essential technical groundwork needed for these live trials, transitioning the cooperative from theoretical research to practical application.
Prior to this update, SWIFT shared results from a series of tests examining the movement of tokenized assets across both public and private blockchains. SWIFT’s research indicated that its existing secure messaging system could serve as a universal “interoperability layer,” connecting various distributed ledger technologies without necessitating costly system integrations from banks with each new platform.
The Linea initiative advances this idea, investigating the impact of migrating SWIFT’s own messaging core on-chain, which could lead to a more native and efficient settlement layer.
For banks, the ramifications are substantial. SWIFT’s system connects over 11,000 institutions but has been criticized for being cumbersome and heavily reliant on intermediaries. A successful blockchain integration could result in quicker settlement times, lower costs, and a more robust framework for cross-border payments.
