The SWIFT network has stated how blockchain integration could prove to be more beneficial than joining digital assets like CBDCs together.
The SWIFT network, an international payments mechanism, has published a post on blockchain integration. Based on its past experiments, it has explained how interlinking blockchains could have huge potential. It claimed how their results could enable transfers of digital assets smoothly, leading to better scalability.
The network touched upon the issue of blockchain interoperability. It stated how the problem had prevented tokenization from helping the asset management industry. Effective tokenization, said the network, could reduce costs, improve efficiency, and open opportunities for new investors.
It also described how its infrastructure connecting blockchains could be better than bringing together CBDCs. On a broader scale, the network was working towards global interoperability for payment systems. Earlier, SWIFT had also been conducting its CBDC testing project.
Chief Innovation Officer at SWIFT, Tom Zschach, said, “Interoperability is at the heart of everything we are doing at Swift to facilitate the seamless flow of value across the world in the face of increasing fragmentation. For tokenization to reach its potential, institutions will need to be able to seamlessly connect with the whole financial ecosystem.”
He further said how SWIFT’s infrastructure could be an enabler for unlocking the potential of tokenization. Their experiments involved reputed private players like Citi, BNP Paribas, Lloyds Banking Group, and others.
The network said it would utilize its current infrastructure to integrate blockchains. With the help of the Chainlink network, SWIFT would provide a single point of access to various blockchain networks.
The development of the SWIFT network comes a few days after social media firm X acquired a license for crypto payments. On a large scale, crypto payments could only be promoted through fintech companies and their infrastructure.
Telegram also green-lit its crypto payments feature in July 2023 in its wallet. Payments company Visa has also jumped on the payments bandwagon for crypto. Crypto cross-border transfers are also gaining shape as crypto payments are getting mainstream.
On the other hand, central bank digital currencies (CBDCs) are also in development worldwide. Their applications haven’t seen a large-scale implementation, which could be a hurdle. But that doesn’t mean CBDC experiments are lagging. Private companies like Citi have conducted surveys on CBDC pilots that have revealed positive outcomes.
It could be a huge success if the SWIFT network successfully integrates various blockchains for payments. It could be a turning point for the crypto payments industry and will receive a tremendous boost.
Besides, leaders from ANZ, BNP Paribas, and Chainlink have praised SWIFT’s initiative in this regard. Most have stated how blockchain technology could effectively use their current banking infrastructure. Any commercial application with SWIFT’s involvement would create huge progress for interoperability in blockchain and payments.