SWIFT and Chainlink’s project provides financial firms with the ability to process transactions through blockchain networks.
Proof-of-concept project
The interbank communication system SWIFT has entered into a partnership with the crypto project Chainlink. This is to work on a proof-of-concept (POC). The project offers traditional financial firms the ability to process transactions over blockchain networks.
Chainlink co-founder Sergey Nazarov announced the partnership at the SmartCon 2022 conference in New York on September 28. He did this together with SWIFT director Jonathan Ehrenfeld Solé. During the conference, Solé said the following:
There is undeniable interest from institutional investors in digital assets.
He added that these traditional financial players want access to digital and traditional assets on one platform.
The proof-of-concept project uses Chainlink’s Cross-Chain Interoperability Protocol (CCIP) allowing SWIFT to instruct the transfer of tokens to almost any blockchain network. This will accelerate the adoption of distributed ledger technology (DLT) blockchains, according to Nazarov.
Most used platform
SWIFT is the most widely used platform for traditional cross-border fiat transactions. It connects more than 11,000 banks around the world. In August, the system registered an average of 44.8 million messages per day.
However, transactions on SWIFT’s network can take several days. The company has explored blockchain and DLT technology and CBDCs (Central Bank Digital Currencies) to enable faster payments.
Chainlink added that this partnership with SWIFT will enable financial institutions to acquire blockchain capabilities without the replacement, development and integration of new connectivity into legacy systems, something it said would require significant customization at an “exceptionally high” cost. .
Mastercard CEO Michael Miebach said during a panel session in May that he expects SWIFT to be no more in five years’ time. The increasing competition from CBDCs for cross-border payments is the main reason.
Mastercard later retracted this statement, noting that Miebach simply meant that SWIFT’s business will evolve from its current form.