Blockchain just became an utterly mainstream part of the global financial system
- Reference: 1759300187
- News link: https://www.theregister.co.uk/2025/10/01/swift_blockchain_plan/
- Source link:
SWIFT – aka the Society for Worldwide Interbank Financial Telecommunication – provides a messaging service that financial institutions use to move money around the world. The service is widely used but is slow because, as [1]explained by ANZ Bank, SWIFT “doesn’t actually move the money.”
“This means the instruction to pay and the movement of funds happen separately, often requiring a complex network of accounts and correspondent banks to enable a payment to be processed. This disconnect can slow payments down and lead to a lack of visibility for both sender and recipient.”
[2]
It can also mean cross-border payments take a couple of days to complete.
[3]
[4]
SWIFT’s problems are well known and financial services types see the service as sound – but also sand in the gears of global trade.
Blockchain enthusiasts who saw cryptocurrency transactions rapidly rippling across distributed ledgers, therefore wondered if their preferred technology could improve the speed of cross-border cash transfers. Many startups, some with support from sensible central banks, have explored this idea, usually by proposing “stablecoins” – digital currencies pegged to the value of a fiat currency – which would be exchanged on a blockchain to provide faster settlements than SWIFT can achieve.
[5]
China has similar ideas: One application for its Digital Yuan is enabling rapid cross-border transactions in the Middle Kingdom’s currency, and not the US Dollar that is often used to move money around the world. If China could use its digital currency to control a slice of global trade, it could weaken Western institutions like SWIFT.
Almost everyone contemplating using a blockchain to move money around the world imagines either supplanting SWIFT, or stealing a lot of its business.
It’s therefore unsurprising that on Monday SWIFT [6]announced its intention to “add a blockchain-based shared ledger to its technology infrastructure, a pivotal step for global finance that promises to make instant, always-on cross-border transactions possible at unprecedented scale.”
[7]Britcoin or Britcon? Bank of England grilled on Digital Pound privacy concerns
[8]SWIFT embraces central bank digital currencies after sandbox success
[9]Use AI to accelerate adoption of central bank digital currencies, says IMF head
[10]Singapore's fintech boss says stablecoins might win before CBDCs even get started
SWIFT will also build tools to integrate its existing payment systems, and its new blockchain.
“It is envisaged that the ledger – a secure, real-time log of transactions between financial institutions – will record, sequence and validate transactions and enforce rules through smart contracts,” SWIFT’s announcement explains. “It will be built for interoperability, both with existing and emerging networks, while maintaining the trust, resilience and compliance synonymous with Swift and critical to the secure functioning of global finance.”
[11]
34 financial institutions from 16 countries have signed up to design the ledger, with help from Ethereum outfit Consensys.
SWIFT didn’t predict when this ledger will go live, which is probably sensible as projects of this magnitude can easily go pear-shaped and previous attempts at using blockchains for high-volume mission critical systems have [12]gone badly .
But for now, an entity that has for decades played an important role in the global economy has decided it needs to rebuild itself on blockchain.
In some ways that’s unremarkable because very few people need to care about the technology plumbing their banks employ. SWIFT adopting Blockchain, however, will likely bring tokenized assets much closer to the mainstream. ®
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[1] https://www.anz.com.au/bluenotes/2025/june/garrett-he-stablecoins-money-payments/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aNz7uUKZSqlqcxxs6x9HOQAAAlI&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aNz7uUKZSqlqcxxs6x9HOQAAAlI&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aNz7uUKZSqlqcxxs6x9HOQAAAlI&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aNz7uUKZSqlqcxxs6x9HOQAAAlI&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://www.swift.com/news-events/press-releases/swift-add-blockchain-based-ledger-its-infrastructure-stack-groundbreaking-move-accelerate-and-scale-benefits-digital-finance
[7] https://www.theregister.com/2023/09/18/digital_pound_treasury_committee/
[8] https://www.theregister.com/2024/03/26/swift_cbdc_interop_test/
[9] https://www.theregister.com/2023/11/16/imf_head_ai_cbdc_call/
[10] https://www.theregister.com/2022/11/04/mas_stablecoin_cbdc/
[11] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aNz7uUKZSqlqcxxs6x9HOQAAAlI&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[12] https://www.theregister.com/2023/05/22/asx_blockchain_rebuild_plan_unlikely/
[13] https://whitepapers.theregister.com/
"promise to bake it into international payment infrastructure"
So it's not yet "an utterly mainstream part of the global financial system". It's just a promise.
I'm very interested to find how they solve [1]the scalability issue with blockchain. International finance is not going to stand for waiting longer and longer when the ledger gets bigger - and bigger it will get. Fast.
So, unless SWIFT can find a way to solve that issue, this promise is worth nothing more than the pixels it is printed on.
[1] https://www.investopedia.com/investing/governance-blockchain-techs-greatest-problem/
Re: "promise to bake it into international payment infrastructure"
Slow, ever slowing, and maybe governed by buggy smart contracts. I can see the possibility for the heist of the century, or for a devastating crash with no direct losses but a lot of indirect ones because the system will grind to a halt and will need days to recover.
Re: "promise to bake it into international payment infrastructure"
Some other commentator noted a few years ago that the CAP theorem applies. I know that move people will, at best, have difficulty with the theorem, but the article is very negligent by failing to mention it. Without a discussion, there will always be a lot of managers thinking, "they just need to keep trying". NO. Trust the math.
WAT?
I KNOW that SWIFT started a blockchain project >5 years ago. It was reported on here. That project was shelved.
The core issue is the mathematics--specifically, the CAP theorem. Blockains have to be CP, therefore, A is left flying in the wind.
HOWEVER, if it takes two days for transactions to occur, then there are institutional issue FAR beyond the layer we are talking about. We've had three-phase commits since 1998, and RAFT was published in 2014. While I can see that RAFT might not directly apply here, I don't think that it would be overly difficult to modify it to support requiring full consensus for individual transactions.
But again, we are talking about minutes verses days. The problem is not at this layer.
Re: WAT?
Banks like to delay payments so they can squeeze any money they can meanwhile.
Which algorithm and whose hardware will be running this blockchain
and what safeguards will there be to stop consensus being snatched by some bad actor?
Even a brief period of lack of control (or just the rumour of such, backed by descriptions of how "naive" blockchains fall when someone gains 51% of the miners) and the loss of trust that results would cause significant damage.
I presume they are considering a permissioned blockchain
A publicly-writable one isn't really going to work, so being permissioned, mining is unnecessary. Thus you end up with just a slow database.
Also, it's not clear from the article why SWIFT is slow, but I would guess one of the issues is batching settlement at the end of the working day or similar.
Thus, choosing a blockchain this early seems either putting the cart before the horse, or it's another demo system that's not going to go anywhere significant.
Oh, and don't start me on Smart Contracts!
It's not Krikkit
"SWIFT’s problems are well known and financial services types see the service as sound – but also sand in the gears of global trade."
I've billed clients in half a dozen countries around the world with no problems except for the US whose banks, seemingly, had never heard of SWIFT, SWIFTBIC, IBAN or, possibly, the existence of other countries. I don't think that blockchain would have made it better.