Today Swift announced that its blockchain based shared ledger is ready for initial use, with 17 banks from six continents preparing to pilot live cross border payments using tokenized deposits. Pilot banks include Citi, HSBC and UBS (full list below). While the infrastructure is now live, the first transactions have yet to happen. The cooperative unveiled the ledger at Sibos last September and completed the design phase in March, so it has moved quickly.
As previously reported, the Swift ledger is an orchestration layer rather than a payments platform in its own right. Tokenized deposits are issued on the banks’ own ledgers, and the shared ledger records and validates the banks’ payment commitments to one another, allowing client funds to move around the clock, including overnight and on weekends. Interbank settlement between the payer and payee banks happens separately through conventional channels such as RTGS systems or correspondent banking relationships. The ledger runs on Hyperledger Besu, the open source Ethereum compatible framework.
Because it is purely an orchestration layer, in theory every participant needs its own tokenized deposit capability, although it is unclear whether Swift will offer an environment for banks that lack one. HSBC said it has connected its Tokenised Deposit Service to the ledger. That last point is worth noting because in past years the step from infrastructure availability to banks completing integrations has often been slow, although there is considerably more momentum today. Two questions matter most. How does interbank settlement work, and how does the ledger interoperate with what banks have already built?
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