Swift Targeting Digital-Fiat Integration

Following a series of interoperability experiments, Swift is now targeting digital and fiat currency inter-operability on its network, to provide access for its members amidst what it says is growing interest in the concept.

The firm says there remain challenges to be overcome before digital assets and currencies can truly scale on a global level, not least the need for growth in divergent platforms, technologies and regulatory environments that underpin digital innovation. This is leading to the emergence of an ecosystem of fragmented ‘digital islands’ that add costs and risks for market participants to navigate, Swift says, adding that institutional investors, for instance, are unable to ramp up their digital asset businesses due to the complexities they face when dealing with a multiplicity of tokenisation platforms.

After a series of experiments that Swift says showed how its infrastructure can facilitate the transfer of tokenised value across public and private blockchains, it is preparing the next level of evolution, which will further evolve its infrastructure to be able to offer members the same level of access to emerging digital asset classes and currencies across a range of use cases in payments, securities, FX, trade and beyond.

“Building on what we’ve learned, we’re paving the way towards real-world solutions capable of interlinking various forms of digital assets and currencies – including plans to test how to enable multi-ledger Delivery-versus-Payment (DvP) and Payment-versus-Payment (PvP) transactions on Swift’s secure, global platform,” Swift states in a post. “In the future, this could enable securities buyers to simultaneously pay for and exchange tokenised assets in real time on our network.

“Without a globally accepted digital form of money, the cash leg in the execution of DvP settlement is particularly challenging, so we’re looking at ways to connect tokenised asset settlement with the corresponding payment transfer taking place on the Swift network,” it continues. “The payment leg will initially be made using existing fiat currencies, but will later be able to use tokenised forms of money, such as CBDCs, tokenised commercial bank money, or regulated stablecoins.”