Swift is one step closer to adopting blockchain.
After months of work, a team of developers at the inter-bank payments platform have completed a proof-of-concept built with the Hyperledger Fabric blockchain. Designed to test whether moving member bank accounts to a distributed ledger could help Swift reconcile in real time, the design is now ready for its next phase.
According to Damien Vanderveken, head of Swift’s distributed ledger technology R&D effort, Australia and New Zealand Banking Group, BNP Paribas, BNY Mellon, DBS Bank, RBC Royal Bank and Wells Fargo have now been given access to the platform for further testing.
If successful, Swift believes the tests could free up billions of dollars in dormant funds in banks’ nostro accounts, which are set up all over the world to hold various currencies just in case they’re needed for transactions. By moving the funds to a shared ledger, the test is seeking to confirm whether that practice can be eliminated, freeing up the capital to be invested in other ventures.
Going forward, the founding banks are expected to complete their work next month, at which time the results will be validated by an additional 22 banks, including ABN Amro, Deutsche Bank, JPMorgan Chase and Standard Chartered.
While a small update, news that the test is moving forward nonetheless has notable implications for both Swift and blockchain adoption in banking more broadly.
This has been especially true as it relates to real-time payments, where Swift is expanding its services using traditional payment rails even while startup Ripple takes aim at financial incumbents with its distributed ledger model for instant payments.
Here, Vanderveken echoed Swift’s customarily incredulous tone, concluding that such developments aren’t necessarily prompting concern in the organization.
“Blockchain is very hyped, that is for sure, and whether blockchain drives innovation, I think it only drives innovation in payments. But does it drive it for instant payments? I wouldn’t say so.”
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Ripple.
Planes in formation image via Shutterstock
The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at [email protected].
Powered by WPeMatico