Belgium-based Swift has announced its partnership with crypto startup Chainlink and multiple other institutions to explore blockchain interoperability challenges.
Specifically, Swift wants to engage in a series of trials to integrate with multiple public blockchains in collaboration with Chainlink and institutions such as ANZ Bank, BNP Paribas, BNY Mellon, Citi, Lloyds Bank, central securities depositaries Clearstream and Euroclear, as well as the DTCC and SIX Digital Exchange.
The trials are intended to use existing Swift infrastructure, standards and messaging to support transfers between current systems and public and private DLT networks. Swift representatives cited by ledgerinsights.com talked about the highly fragmented blockchain ecosystem and emphasised the lack of feasibility for financial institutions to connect to every platform individually. Swift is working with the community to address this issue by developing an interoperability model that enables access to different platforms globally.
Going forward, the trials will have three use cases. The first one will involve transfers between two Ethereum test net wallets, while the second will test transfers from a public to a permissioned blockchain. The final trials will explore transfers between Ethereum and another public blockchain.
The research will also investigate various non-technical issues, including compliance, confidentiality, privacy and liability or recourse when transacting on a public blockchain.
Swift previously worked with Chainlink on a proof of concept in 2022. The collaborative proof-of-concept was designed to allow SWIFT to instruct token transfers across nearly every blockchain environment. Chainlink added that this would allow financial institutions to become blockchain-capable without confronting high upfront costs and development challenges.
Chainlink is best known for its public blockchain oracle network, but it also offers a has a blockchain interoperability solution, namely the Cross-Chain Interoperability Protocol.
In October 2022, SWIFT has laid out its blueprint for a global central bank digital currency (CBDC) network following an 8-month experiment on different technologies and currencies.
According to atlanticcouncil.org, about 90% of the world's central banks were using, trialling, or looking into CBDCs at the time. Most didn’t want to be left behind by Bitcoin and other cryptocurrencies but were struggling to find solutions to technological complexities. Swift’s solution, once scaled up, would enable banks to rely on a single primary global connection, rather than thousands if they were to set up connections with each counterpart individually.
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