SWIFT has proposed a tokenized future for its own role in the unified ledger

The Society for International Interbank Financial Telecommunications (SWIFT) has been keeping a close eye on the development of fintech, with an eye on the future. After various projects using new technologies, the current global payment system has thrown its pillar behind the integrated ledger payment model.

According to a post on its website, SWIFT is specifically looking at tokenization and a shared ledger model. A shared infrastructure can provide real-time balance for all participants in a shared ledger, he said. That doesn't mean there's no need for messaging, SWIFT was quick to add:

“Shared ledgers are not well-suited for handling and storing large amounts of data due to the synchronization of information between parties and the computing power required. This is where the messaging layer fits in.”

“For transactions to be frictionless, more types of data must be transferred to enable value-added services such as AML, compliance, sanctions screening, trade and accounts receivable reconciliation,” he continued.

RELATED: WEF 2022: SWIFT May Not Exist In 5 Years, Says MasterCard CEO

Instead of starting a unified ledger from scratch, SWIFT proposes the creation of a state machine – “a dynamic model that reflects the current state of transactions and balances in institutions” – that could be built on top of the ISO-20022 messaging technology already in use. It can run on the blockchain or on a centralized platform like SWIFT's Transaction Manager.

Consolidated ledger technology has been adopted by financial institutions participating in the International Monetary Fund's XCC platform and Integrated Accountability Network. The Bank of International Settlements has also approved the model.

SWIFT, founded in 1973, settled on a unified ledger model after considering several other options. In the year In 2022, in a pilot project with fintech Symbiont, Symbiont's blockchain-driven aggregator platform was to improve its data delivery to its corporate clients.

In a 2023 report, SWIFT opposed the use of a unified ledger, favoring it as a “single point of access” to various blockchain networks.

SWIFT plays a key role in imposing economic sanctions globally. In the year In February 2022, when the Russian invasion of Ukraine began, the European Commission ordered an unknown number of Russian banks to be removed from SWIFT.

Magazine: Block by Block: Blockchain technology is changing the real estate market.