SWIFT, the global banking messaging network, has announced that banks in North America, Europe and Asia will begin live testing of digital assets and currency transactions over its network starting next year, according to an Oct. 3 report. statement.
These trials will explore how financial institutions can use their existing SWIFT connections to process transactions involving both traditional and digital assets.
‘Digital islands’
SWIFT pointed out that institutional interest in digital assets is growing rapidly, with 134 countries exploring CBDCs. The market for tokenized assets could reach $30 trillion by 2034, and 91% of institutional investors have expressed interest in it.
SWIFT aims to demonstrate how its network can alleviate connectivity issues between digital platforms, which remain a major barrier to wider industry adoption. The company emphasized that the trials will focus on streamlining connections between disparate digital systems, often called “digital islands,” that hinder the seamless use of digital assets.
Tom Zschach, Chief Innovation Officer of SWIFT, emphasized the importance of integrating both digital and traditional assets, stating:
“As new forms of value emerge, our intention is to continue to provide our community with the ability to seamlessly execute and track transactions across all types of assets – using the same secure and resilient infrastructure that is an integral part today of their activities.”
To support these efforts, SWIFT plans to enhance its infrastructure by developing an advanced system capable of managing digital asset and currency transactions across different networks. This follows the company’s previous work in linking public and private blockchains, as well as its efforts to connect Central Bank Digital Currencies (CBDCs) and integrate other digital assets.
The Hong Kong Monetary Authority (HKMA) and Banque de France are already working with SWIFT in preparation for next year’s trials. They are exploring SWIFT’s capabilities in currency experimentation as part of the European Central Bank’s initiative to promote new wholesale payment technologies.
SWIFT is also exploring how its interconnection capabilities can connect emerging bank-led networks, such as the US Regulated Settlement Network, with traditional financial systems.
In addition, the company has joined Project Agora, an initiative of the Bank for International Settlements. This project focuses on integrating tokenized commercial bank deposits and tokenized wholesale CBDCs on a unified platform.