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SWIFT and Major Banks Partner with Chainlink to Test Public-Private Blockchain Integration for Global Banking

SWIFT Partners with Chainlink and Major Banks to Test Integration of Public and Private Blockchains for Global Banking

Introduction

SWIFT, the global financial messaging service, is partnering with major banks and Chainlink, a web3 infrastructure provider, to test the integration of public and private blockchains for global banking.

The Collaboration

The Society for Worldwide Interbank Financial Telecommunication (SWIFT), the financial messaging system driving the majority of global monetary and securities transfers, has created a joint trial project to connect private and public blockchains. The collaboration involves leading banks, web3 infrastructure provider Chainlink, and several global financial organizations.

The Aim

The aim is to extend SWIFT’s prior blockchain interoperability efforts, initiated in 2022 to explore the operation of private blockchains with tokenized assets in the financial sector. To bolster this goal, SWIFT has chosen to leverage Chainlink’s Cross-Chain Interoperability Protocol (CCIP). The move reflects a growing institutional interest in accommodating customer needs via permissioned and public blockchain networks such as ethereum, according to Jonathan Ehrenfeld, head of securities strategy at SWIFT.

Participants

Participants in this collaboration range from financial companies like BNP Paribas, BNY Mellon, Citi, and Euroclear to organizations such as SIX Digital Exchange (SDX) and The Depository Trust & Clearing Corporation (DTCC).

Chainlink’s Contribution

Chainlink contributes an “enterprise account abstraction layer,” reflecting a widespread adoption of asset tokenization across banking and financial market infrastructure sectors. According to Sergey Nazarov, co-founder of Chainlink, this trend has the capacity to multiply the blockchain industry’s size by a factor of ten.

Nazarov further elaborated on the merits of CCIP, describing it as a “universal messaging interface” for cross-blockchain communications. He highlighted its distinctive edge in interfacing with private blockchains, bolstered by active risk management network features, which position it as a preferred choice for major financial players.

Incorporating the same security model as Chainlink’s oracle network, CCIP has managed over seven trillion dollars in value. SWIFT’s objective revolves around exploiting existing banking systems. As SWIFT’s chief innovation officer, Tom Zschach envisions a multi-chain future and believes Chainlink can facilitate cost-efficient integration for banks across the globe.

The Proof-of-Concept

The proof-of-concept is designed to illustrate the practicality of interoperability across public and private networks. It entails the issuance of a security token on a private chain by a bank, using CCIP, followed by its transfer to a custodian’s chain. Subsequently, the tokenized security could be purchased by a third bank and transferred to its private chain.

The Future

This endeavor may be a step towards enabling banks to optimize different types of securities for public chains. The program stems from the understanding that digital assets are likely here to stay. Nazarov equated this transition to the evolution of independent networks into the singular entity known as the Internet.

Conclusion

The collaboration between SWIFT, major banks, and Chainlink to test the integration of public and private blockchains for global banking represents a significant step towards interoperability across blockchain networks. With the increasing adoption of asset tokenization and the growing interest in permissioned and public blockchain networks, the use case for blockchain technology in the financial sector continues to expand.

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Adrian Ovalle
Adrian Ovalle
Adrian is working as the Editor at World Weekly News. He tries to provide our readers with the fastest news from all around the world before anywhere else.

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