It said Thursday that global banking messaging network Swift will conduct real-time transactions in next year’s tagged assets and digital currencies, the latest step in currently integrating those assets into the wider financial system.
Banks and asset managers have been exploring traditional assets such as bonds for years.
They hope that by using digital units representing the share of underlying assets (usually blockchain-based tokens), transactions can be faster, cheaper, and more efficient, including fewer middlemen participating in many transactions.
But, so far, these have failed to gain a lot of appeal in the wider market.
About 90% of central banks around the world are also testing the Central Bank Digital Currency (CBDC), a digital version of the Fiat currency, which helps facilitate transactions of token assets. Currency authorities are trying to make technological advances, which makes cryptocurrencies like Bitcoin.
Swift plays a crucial role in global banking, and he has been experimenting with CBDC and token assets. It said in March it will launch a new platform to connect the CBDC currently under development to the existing financial system.
“Now, we’re seeing the industry demands to leave the (trial) phase and seeing digital assets really move and let counterparties pay them with real money,” said Nick Kerigan, head of innovation at Swift.
“This is the stage where we move to next year, albeit in a controlled way.”
While the potential is great, the diversified nature of the market is hindering that few plans are planned outside the bank’s own internal systems.
Similarly, the central bank is testing cross-border payments for wholesale CBDCs, but within the group.
The latest Swift program involves different types of digital assets across different platforms.
“To successfully trade and resolve token bond transactions, you need cash, and that’s where the token deposit or wholesale CBDC is located,” Kerigan said.
“If you only have delivery or just payment, that’s not good enough, you need both.”
©Thomson Reuters 2024
(This story has not been edited by Tech Word News’s staff and is automatically generated from the joint feed.)
