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SWIFT Offers a Messaging Layer Solution for Shared Ledger, But Stays Committed to the Unified Model

SWIFT takes a deep dive into tokenized finance

The Society for Worldwide Interbank Financial Telecommunication (SWIFT), a cornerstone of the global payments landscape since 1973, has been actively exploring new trends in fintech, specifically with an eye towards the tokenization of assets and the potential of a unified ledger system.

According to a detailed exposition on its website, SWIFT has explored the realm of tokenization and shared ledger models, recognizing the intrinsic value of a common infrastructure. Such a system, SWIFT notes, could: 

"provide real-time balance to all of the participants in the shared ledger." 

However, the organization was quick to highlight the limitations of shared ledgers in handling vast data volumes due to synchronization and computing power demands. SWIFT suggests:

"Shared ledgers are not well suited to carrying and storing high volumes of data... This is where a messaging layer fits in."

This perspective underscores SWIFT's proposition for a seamless integration of traditional messaging services with blockchain technology, aiming for a balanced approach that leverages the best of both worlds. The organization envisions employing ISO-20022 messaging technology, a standard already in use, as the foundation for this hybrid model. 

The future of international payments: a unified ledger approach

In its forward-looking embrace of a unified ledger model, SWIFT positions itself at the forefront of revolutionizing international payments. This pivot is not merely a theoretical exploration; it represents a concrete step towards integrating SWIFT's legacy systems with the realm of tokenized finance. 

The endorsement of unified ledger technology by notable institutions like the International Monetary Fund, through its XC platform, and the participation of various financial entities in the Regulated Liability Network, highlights the model's growing prominence.

SWIFT's advocacy for a unified ledger springs from a clear vision: to enhance the efficiency and inclusivity of global financial transactions. The organization proposes a sophisticated state machine — a dynamic model adept at reflecting the real-time status of transactions and balances across financial institutions.

In 2022, SWIFT's collaboration with fintech firm Symbiont on the Assembly platform pilot project marked a pivotal step towards enriching information delivery to corporate clients via blockchain technology. Yet, SWIFT maintains a pragmatic stance on the use of a unified ledger. A 2023 report articulated a preference for SWIFT as a singular access point to diverse blockchain networks, underscoring its vital role in global economic sanctions, notably during significant geopolitical events such as the exclusion of Russian banks following the 2022 invasion of Ukraine.