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  • L Misthos and S Pettigrove

SWIFT to test-run cross-chain settlement

SWIFT, the global interbank communication network, and Chainlink, a leading provider of real-world data to blockchain networks, have announced a collaborative effort to explore the integration of blockchain technology with traditional financial markets. This initiative aims to leverage SWIFT's infrastructure to facilitate the transfer of tokenized assets across various blockchain networks and comes eight months after SWIFT announced that it was exploring the use of blockchain technology to automate its eponymous inter-bank messaging service.

The tokenisation initiative will involve a series of experimental tests with several prominent financial institutions, including the Depository Trust and Clearing Corporation (DTCC), Australia and New Zealand Banking Group Limited (ANZ), BNP Paribas, BNY Mellon, Citi, Clearstream, Euroclear, and Lloyds Banking Group. The objective is to examine the potential for these institutions to utilize SWIFT's infrastructure for instructing the transfer of tokenised assets across different blockchain networks.

Chainlink's role in this venture is to ensure connectivity across both public and private blockchains. The partnership between SWIFT and Chainlink was initially announced at Chainlink's annual conference, SmartCon, last year.

The integration of blockchain technology into capital markets is considered a potential game-changer by some commentators. In SWIFT's press release, it stated:

In capital markets, there’s a growing view that blockchain technology has the potential to generate efficiencies, reduce costs and open up opportunities for some parts of the industry. For example, private markets have historically been dependent on legacy systems and processes, which add costs and deter investment. By rationalising operations and settlement processes, blockchain could attract more investors into the private markets and ultimately increase liquidity.

The initiative is a significant step for traditional financial institutions in exploring asset tokenisation, but also offers promise for the cryptocurrency industry. Chainlink's co-founder, Sergey Nazarov, noted that banks hold the majority of global capital. If the blockchain industry is to grow beyond its current market capitalization of $1.08 trillion, banks and their clients will play a pivotal role in driving this growth.

The collaboration between SWIFT and Chainlink, therefore, represents a significant stride towards the integration of traditional finance and blockchain technology, potentially paving the way for the future of the financial industry.


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