The SWIFT network, a global communication platform for over 11,500 financial
organizations, is collaborating with Consensys, a major Ethereum software
company, and a group of 30 financial entities. The goal is to create a
prototype for facilitating continuous, around-the-clock, international
payments.
Prominent financial institutions participating in this initiative include
Bank of America, Citi, Deutsche Bank, JP Morgan Chase, and Wells Fargo.
According to a company statement, the proposed ledger system, designed as a
secure and real-time record of transactions between financial institutions,
will record transaction details, ensure correct sequencing, validate the
information, and automate rule enforcement through the use of smart
contracts.
Neither Consensys nor SWIFT has publicly confirmed if the prototype is being
developed using the Ethereum mainnet or
Linea, a Layer-2 network incubated by Consensys. When contacted for comment,
SWIFT did not respond. Consensys stated they were not prepared to release
further information at this time.
Consensys is among the investors that support the independent news
publication, Decrypt.
In a related blog post, the company stated that the decision by SWIFT
to incorporate blockchain technology into its established network represents
a key milestone for both traditional and decentralized financial systems,
emphasizing a coming together rather than competition.
SWIFT primarily operates as a messaging platform, not a payment processing
system. It doesn’t hold funds, clear transactions, or handle settlement.
Instead, the SWIFT network serves as a secure communication channel for
banks, brokerages, and other financial entities to exchange details on money
transfers, including the amounts, currencies, and recipients.
The SWIFT network connects approximately 11,500 organizations across more
than 200 countries and territories. According to a Citi report from 2022,
the cumulative daily value of transactions facilitated through SWIFT messages
was around $7.5 trillion.
Should this prototype lead to even a modest portion of SWIFT’s transaction
volume being processed on a blockchain, it could result in substantial
benefits. The SWIFT network handles approximately 53 million financial
messages, known as FINs, on a daily basis.
In comparison, the Ethereum mainnet processed 1.4 million transactions
yesterday, according to Etherscan data. If only 6% of SWIFT network’s
volume were to transition to the Ethereum network, this would effectively
double the network’s throughput.
The impact would be even more significant on Linea, which launched its
mainnet in 2023 and processed 145,000 transactions on Sunday, according to
data from LineaScan. Based on those figures, shifting just 0.51% of SWIFT’s
volume to Linea would be enough to double its processing capacity.