SWIFT prepares for digital currency transactions in 2025
SWIFT, the global bank messaging network, is set to trial live transactions involving tokenised assets and digital currencies next year, according to a recent report by Reuters.
For several years, banks and asset managers have explored the concept of "tokenising" traditional assets such as bonds. Tokenisation, which uses blockchain-based tokens to represent shares of underlying assets, is seen as a way to make trading more efficient, cutting out middlemen and reducing costs. However, despite its potential, the tokenised assets market has yet to achieve widespread adoption.
Meanwhile, approximately 90% of the world's central banks are testing Central Bank Digital Currencies (CBDCs), digital equivalents of traditional fiat currencies. These CBDCs are expected to facilitate the trading of tokenised assets, as monetary authorities seek to keep pace with technological advancements like cryptocurrencies, including Bitcoin.
SWIFT, a crucial player in the global financial infrastructure, has been conducting trials of both CBDCs and tokenised assets. In March, the organisation announced plans to launch a new platform that would connect the developing world of CBDCs to the traditional financial system.
However, challenges remain as the fragmented nature of the market and the slow progression of many initiatives, which are mostly limited to internal systems within banks, have held back broader adoption. While central banks are testing wholesale CBDCs for cross-border payments, these trials have been limited to small, closed groups. SWIFT's latest initiative aims to bridge the gap by facilitating transactions involving various digital assets across different platforms, as per the report.
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