The Swift interbank communication network has partnered with Consensys, an Ethereum ecosystem developer, to create a blockchain settlement system.
In a Monday announcement, SWIFT revealed it is collaborating with more than 30 financial institutions and Consensys to develop blockchain focused on creating infrastructure for “real-time 24/7 cross-border payments.”
This new blockchain aims to ensure interoperability with both “existing and emerging networks” while maintaining compliance standards. Consensys is responsible for creating the conceptual prototype in the initial phase and defining future phases of work.
The announcement indicated, “The ledger will extend Swift’s financial communication role into a digital environment.” It also noted that the platform will facilitate the exchange of tokenized assets, with the specific types of tokens determined by central and commercial banks.
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A new backbone for traditional finance
Blockchain technology, once labeled as a solution in search of a problem, is now rapidly being integrated into the traditional finance sector. As highlighted in the announcement, Swift’s vision for its new infrastructure is “a secure, real-time log of transactions between financial institutions.”
This initiative is significant, given that Swift is foundational to most international payments in today’s financial ecosystem. According to the organization’s website, over 11,500 institutions across 200 countries rely on its infrastructure for transaction processing.
Swift does not directly handle any money; it functions as an interbank communication network aimed at minimizing errors and fraud risk. Its extensive presence means that sanctions or exclusion from Swift can effectively isolate a country or bank from the global financial system.
“Given the scarcity of alternatives to SWIFT, financial sanctions limiting access to this network have become increasingly burdensome for affected entities,” as stated in a US Federal Reserve Bank of New York report.
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Swift expands blockchain exploration
This isn’t Swift’s first venture into blockchain technology. In March 2024, Swift acknowledged the importance of tokenization and the shared ledger model. The organization perceives a continuing function for its messaging layer within a blockchain-based financial framework:
“Shared ledgers are not well-suited to carrying and storing high volumes of data due to the synchronization of data 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 current fiat payment systems. This initiative was executed in partnership with UBS Asset Management and the blockchain oracle network Chainlink, as part of the Monetary Authority of Singapore’s Project Guardian.
Moreover, in late 2024, Swift announced that banks in North America, Europe, and Asia would initiate digital asset trials on its network. These trials aim to determine how the banking network can offer financial institutions unified access to “multiple digital asset classes and currencies.”
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