SWIFT will connect tokenized and traditional finance with hybrid technology.
We are making use of ISO-20022 to facilitate the integration of tokenized payments.
With unified ledger communications, SWIFT addresses the growth of fintech.
In its latest vision for integrating with a tokenized future, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) emphasized the critical significance of a messaging layer within tokenized payment systems. This strategy combines the inventive possibilities of shared ledger technology with the reliable characteristics of SWIFT’s communications services.
CB⚡DC DAILY: 🤘🏼#Swift promotes the concept of a universal shared ledger. But based on messaging
I respect Swift, but the future will not look like the past.#CBDC #FinTech@efipm@Kiffmeister@sonjadav@Jonas__Gross@conrad_kraft@JoshuaLipskyhttps://t.co/lo2fPfBicK
— Richard Turrin (@richardturrin) March 22, 2024
SWIFT’s Position on Shared Ledgers and Tokenization
According to SWIFT, Fintech is advancing quickly, especially in tokenization and shared ledger models. As a result, the company understands how shared infrastructure can provide real-time balance updates to every member of a shared ledger.
However, SWIFT also draws attention to the limitations of shared ledgers when handling large amounts of data. This restriction highlights the requirement for a messaging layer to handle data-intensive modern financial services and transactions, such as compliance, sanctions screening, and anti-money laundering (AML) procedures.
Messaging’s Place in a Unified Ledger
SWIFT’s proposal suggests merging decentralized and centralized systems with ISO-20022 messaging. This approach utilizes blockchain or SWIFT Transaction Manager to manage transactions and balance states across institutions dynamically. The hybrid strategy aims to efficiently handle legal requirements and facilitate a smooth transition to tokenized payment systems.
Overcoming the Adoption Challenges
SWIFT acknowledges that moving to a shared ledger system presents challenges and coordination issues. The organization contends that the financial system’s interconnected components can eliminate market concentration risks. It describes a workable strategy for implementing shared ledgers by enhancing current systems and rapidly bringing rich, structured data.
SWIFT aims to bridge the gap between new digital infrastructure and traditional banking by promoting its role in tokenized payment systems. It proposes an architecture including a messaging layer and shared ledger tech to meet industry needs. This technique underscores the importance of safe financial messaging services like those provided by SWIFT. It ensures secure and efficient transactions, fostering communication in a tokenized society.
