In 2024, there has been a notable increase in the acceptance of digital currencies, primarily due to the expansion of the ETF market.
To embrace this growing trend, SWIFT, the international bank messaging network headquartered in Belgium, is gearing up to launch practical trials for conducting transactions involving digital assets and currencies.
What advantages can be gained from SWIFT’s live experiments?
These trials will engage banks across North America, Europe, and Asia, linking more than 11,500 financial institutions globally.
Although SWIFT does not handle funds directly, its network enables secure communication and transactions between banks, allowing for the exchange of various financial messages.
Set for 2025, these trials will be a crucial step in showcasing how SWIFT can aid in the transfer of digital and traditional assets across more than four billion accounts worldwide.
This will present an upgraded version of its infrastructure designed for practical use cases.
Commenting on this, Tom Zschach, the Chief Innovation Officer at Swift, mentioned,
“As new forms of value emerge, our goal is to consistently provide our community with the capability to seamlessly conduct and track transactions involving various types of assets — utilizing the same secure and robust infrastructure that forms the core of their operations today.”
Unfamiliarly, the upcoming live trials will leverage SWIFT’s extensive global network to seamlessly integrate different digital and traditional currency platforms.
What else is there?
These trials will exhibit how financial institutions can efficiently transact across both existing and emerging asset classes.
This demonstration underscores the potential for banks to optimize their current SWIFT connections, thereby enhancing efficiency and accessibility in global finance.
Reiterating this, the company stated,
“Global financial institutions will be able to pilot transactions for the settlement of digital assets and currencies using Swift’s global platform.”
Furthermore, SWIFT plans to transit from experimental trials to real-world implementation of digital asset and currency transactions starting in 2025.
This move will empower global financial institutions to leverage SWIFT’s infrastructure for seamless transactions involving traditional and digital assets.
By promoting interoperability among different currencies and networks, SWIFT aims to simplify and secure cross-border financial transactions.
This development reinforces SWIFT’s dedication to advancing in digital finance and establishes it as a primary facilitator of modern transactions.
Will Central Bank Digital Currencies (CBDCs) have a role?
On that note, SWIFT, a pivotal player in global banking, has been conducting trials involving both CBDCs and tokenized assets.
Back in March, the company announced its plans to launch a new platform connecting CBDCs under development with the existing financial system.
As per the latest update, the SWIFT initiative encompasses various types of digital assets interconnected across different platforms.
Therefore, echoing this sentiment, Nick Kerigan, SWIFT’s head of innovation, stressed,
“To execute a tokenized bond transaction successfully, you require both the cash and that’s where a tokenized deposit or wholesale CBDC comes into play. Just having delivery or just payment is insufficient, you need both.”