Swift, a banking co-operative that handles cross-border payments, has signaled its intentions to explore the expansion into the digital asset network as well.
This is a very big sign that the digital assets are here to stay and their volumes are expected to grow in the coming years and this also represents a direct challenge to the likes of Ripple (XRP) and other private blockchains which were hoping to corner a large share of the cross-border payments industry.
Digital Assets are Here to Stay
Till a few years back, the digital assets were rejected as no more than a fad but over the last couple of years, their usage has grown exponentially which has forced the authorities, regulators, banks, and financial institutions to sit up and take notice. Now there is an increasing realization that these entities also need to improve their understanding and coverage of digital assets or else they would be left behind in the next stage of growth of the financial ecosystem, which the digital assets represent. The role played by Ripple, stablecoins and other digital currencies in cross-border payments does not seem to have missed the eyes of these firms.
“As a neutral cooperative with a reach across 11,000 institutions in more than 200 countries, and oversight by central banks globally, Swift is uniquely placed to engage closely in the future of securities,” said Thomas Zschach, chief innovation officer, Swift. “We look forward to this set of new experiments and innovating collaboratively with market participants on the emerging trend of tokenized assets.”
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Central Banks into CBDCs
We are also seeing a lot of central banks around the world looking to launch their version of digital currencies and when this happens, all the platforms associated with the cross-border payments would be facing a big challenge as this would mean that they would need to upgrade and adapt their platform to a hybrid model which would need to handle both fiat and digital currencies.
Swift would now be exploring the interoperability between the various systems and participants and this would be done along with Clearstream, Northern Trust, SETL, and others who would act as transactional partners in different parts of the chain and study the transactional flow and clearing processes. The testing and exploration would be used to study how Swift can act as a kind of interconnector between all of these entities and ensure that stablecoins, CBDCs, and others can co-exist within the system and at the same time, maintain the robustness and reliability of the system now that it is clear that the digital assets would be around for the years to come. If Swift does manage to crack the digital assets network, it could hold a big advantage considering its size and its network of partners.