Swift blockchain ledger readies 17 banks for payment pilots

Swift says its blockchain ledger is ready for initial use, and 17 banks across six continents are preparing to test cross-border payments with digital bank deposits. The Swift announcement marks a move from designing the system to preparing live transactions.

The service is designed to let banks move money for customers overnight and on weekends, when some traditional payment processes are unavailable. Swift said the first trials will use tokenized deposits: digital representations of money held in a bank account.

What role will Swift’s ledger play?

Swift’s ledger will connect banks’ own systems and coordinate the movement of tokenized deposits between them. It will not hold customer funds. Participating banks issue the digital deposits on their own ledgers, while Swift’s shared ledger helps coordinate transfers across those systems.

Final settlement will still happen through existing systems. That means the pilot aims to make payment instructions and money movement available around the clock while keeping the banks’ current settlement arrangements in place.

Which banks are taking part?

The 17 banks named by Swift include Citi, BNY, HSBC, UBS, Wells Fargo, BNP Paribas, ANZ, DBS and MUFG. The group also includes First Abu Dhabi Bank, FirstRand, Itaú Unibanco, Lloyds, Mashreq, OCBC, Standard Chartered and UOB.

Swift said it developed the ledger in nine months, using feedback from financial institutions. It announced the project the previous year. The initial payment use case is meant to test whether banks can connect their digital money systems through a shared network.

When will customers see the service?

The banks are preparing to pilot live transactions, but Swift’s announcement does not give a date for the first transaction or say when the service will be broadly available. Swift said the ledger will expand after an initial controlled launch phase.

The project also does not mean customers will need to use cryptocurrency. The deposits are issued by banks and represent money customers already hold there. Whether the trials lead to faster payments in everyday use will depend on how the banks connect their systems and move from pilots to wider service.

References

• Swift announcement — swift.com