By Alicia Maher
SWIFT, the international interbank messaging platform, has partnered with Chainlink, the price oracle provider, to foster a new project. The PoC (proof-of-concept) project would enable traditional financial institutions to conduct transactions on various blockchain networks.
SWIFT Working To Enhance Payment Speed With New Partnership
On September 28th, the SmartCon 2022 Convention took place in New York. Various financial institutions and companies were in attendance.
During the event, Sergey Nazarov, the co-founder of Chainlink, and Jonathan Ehrenfeld Solé, the strategy director of SWIFT, made an announcement. Both firms stated that they are working on a new initiative.
This initiative would increase the payment speed of the SWIFT network. According to Solé, there is an undisputable demand from large investors for crypto assets.
He added that conventional financial institutions want access to traditional and digital assets on one network. Meanwhile, the proof of concept makes use of Chainlink’s CCIP (cross-chain interoperability protocol).
With this technology, SWIFT messages can direct token transfers in and out of nearly different blockchain systems. Nazarov stated that this would speed up the deployment of DLT (distributed ledger technology) blockchain throughout capital markets and traditional finance institutions.
As a result, more than 11,000 financial institutions globally can communicate with one another through the interbank communication system, SWIFT. This platform is the most popular choice for conducting traditional cross-border financial transactions.
SWIFT Testing Usage Of Blockchain Tech And CBDC
In August, the platform recorded 44.8 million messages on average daily. Unfortunately, the completion of transactions conducted via the SWIFT network takes several days.
As a result, the system has been working on how to speed things up. The firm has been investigating the usage of blockchain technology, DLT, and CBDC to facilitate faster payments.
Chainlink said this relationship with SWIFT allows financial firms to achieve blockchain functionality. They will not have to replace, create or integrate a new network or technology into their old systems.
According to Chainlink, a replacement or integration would cost a lot of money. In May, Michael Miebach, Mastercard CEO, stated during a panel discussion that he does not anticipate SWIFT to exist in five years.
Perhaps, this might be due to the increasing competition from CBDCs for cross-border payments and settlements. Currently, various countries and jurisdictions are exploring CBDC and crypto usage for cross-border settlements.
After further consideration, Mastercard ultimately decided to retract the comment. The payment giant pointed out that Miebach meant that SWIFT’s operations would keep evolving from their present position.