Bank messaging network SWIFT has issued a report outlining its approach to connecting with blockchain technology to address the challenge of interoperability among different blockchain networks.
In its publication titled “Connecting blockchains: Overcoming fragmentation in tokenised assets,” SWIFT concluded that an incremental strategy that links existing systems to blockchains is a “more plausible” path for market advancement in the near future, as opposed to consolidating central bank digital currencies (CBDCs), tokenized deposits, and assets within a single unified ledger, media reports said.
The report highlights the existing “lack of secure interoperability” between diverse blockchain networks, resulting in inefficiencies and subpar user experiences. SWIFT, however, believes it has the potential to resolve these interoperability issues.
Collaborating with financial institutions and the blockchain oracle network provider Chainlink, SWIFT has demonstrated its capacity to offer a singular access point to multiple networks using its current infrastructure. This approach significantly diminishes operational complexities and costs for institutions involved in supporting tokenized assets.
Tom Zschach, SWIFT’s Chief Innovation Officer, stated in a press release that the full potential of tokenization can be achieved when institutions establish connections throughout the entire financial ecosystem. Zschach elaborated, “Our experiments have clearly demonstrated that the secure and trusted infrastructure of Swift can serve as that central connectivity point, removing a substantial obstacle in the advancement of tokenization and unleashing its potential.”
