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By Marc Jones
LONDON (Reuters) -Global financial messaging network SWIFT and more than 30 global banks announced on Monday they were now working "at pace" on making cross-border payments instantaneous and on a system capable of handling the various new forms of digital money.
SWIFT, a key part of the world’s financial architecture, said the institutions were collaborating on a blockchain-based "shared digital ledger" they see as vital for modernising international bank transactions.
The timeline is yet to be defined, but it will initially focus on enabling real-time 24/7 cross-border payments, which should also make the process cheaper given it can currently take days.
Belgium-based SWIFT also plans to build on recent pilot projects to make its systems "interoperable" with new ones now emerging for stablecoins, tokenised bank deposits and central bank digital currencies (CBDCs) being developed by the likes of China and the European Central Bank.
SWIFT’s main advantage is that its existing network is already usable in over 200 countries and connects more than 11,000 banks who use it to send trillions of dollars every day.
U.S. President Donald Trump’s son and crypto advocate Eric Trump recently described SWIFT as "antiquated", but its hope is that by adding blockchain functionality it can evolve and still provide compliance and resilience features traditional banks require.
Stablecoins are rapidly moving from niche crypto instruments into the mainstream. A report by Citi last week estimated there could be up to $4 trillion worth of stablecoins in circulation by 2030, with $100 trillion of trade to be done using them a year.
About 90% of the world’s central banks are now exploring digital versions of their fiat currencies as they look to avoid getting left behind.
SWIFT said it is envisaged that the shared digital ledger - a secure, real-time log of transactions between banks - would "record, sequence and validate transactions and enforce rules through smart contracts."
The group of more than 30 global financial institutions that will help design and build the ledger include JPMorgan, HSBC, Deutsche Bank, MUFG, BNP Paribas, Santander and OCBC, as well as a number of banks from the Middle East and Africa.