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    Swift Partners with ConsenSys for Blockchain Settlement Solution

    Ethan CarterBy No Comments3 Mins Read
    1759139022


    The Swift interbank communication network is collaborating with Ethereum ecosystem developer Consensys to create a blockchain settlement system.

    In a Monday announcement, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) is partnering with over 30 financial institutions and Consensys. The primary objective is to create infrastructure for “real-time 24/7 cross-border payments.”

    A key goal of the new blockchain will be to achieve interoperability with “existing and emerging networks,” while ensuring compliance. Consensys will develop the conceptual prototype in the first phase and outline subsequent work phases.

    “The ledger will extend Swift’s financial communication role into a digital environment,” the announcement stated. Swift noted that the platform will facilitate the exchange of tokenized assets, with the specific types of tokens determined by central and commercial banks.

    Related: SWIFT announces successful second sandbox connector tests for CBDC and more

    A new backbone for traditional finance

    Blockchain, once deemed a solution in search of a problem, is now being swiftly embraced by the traditional finance sector. According to the announcement, Swift’s vision for the new infrastructure is “a secure, real-time log of transactions between financial institutions.”

    This is particularly significant given that Swift underlies most international payments within the current financial ecosystem. As stated on the organization’s website, over 11,500 institutions in more than 200 countries depend on its infrastructure for transaction processing.

    Swift does not directly handle the transfer of money; rather, it serves as an interbank communication network aimed at minimizing errors and the risk of fraud. Its pervasive role means that sanctions or exclusion from Swift can effectively isolate a country or bank 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 report from the US Federal Reserve Bank of New York report.

    Related: UK Finance tests tokenized sterling deposits with six major banks

    Swift expands blockchain exploration

    This is not Swift’s first foray into blockchain technology. In March 2024, Swift acknowledged the potential of tokenization and the shared ledger model. The organization envisions an ongoing role 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 way data is synchronised across parties and the computing power required. This is where a messaging layer fits in.”

    In November 2024, Swift utilized its global financial messaging network to integrate tokenized fund processes with existing fiat systems. This initiative was executed in collaboration with UBS Asset Management and the blockchain oracle network Chainlink, as part of Singapore’s Monetary Authority’s Project Guardian.

    Additionally, 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 explore how the banking network can provide financial institutions with unified access to “multiple digital asset classes and currencies.”