The international payments network Swift has announced plans to develop a new blockchain platform in collaboration with several major global banks. This strategic initiative aims to modernize cross-border transactions and directly address the competitive pressure from the rapidly expanding stablecoin market.
The project will involve partnerships with financial giants including Bank of America, Citigroup, and NatWest. By creating a shared digital ledger, Swift intends to streamline the process for handling tokenized assets and stablecoins, positioning itself as a key player in the future of digital finance.
Key Takeaways
- Swift is building a proprietary blockchain to facilitate transactions for tokenized assets and stablecoins.
- The initiative is a collaboration with major banks like Bank of America, Citigroup, and NatWest.
- The move is a direct response to the growing influence of the $300 billion stablecoin industry, which threatens traditional payment systems.
- Swift is partnering with blockchain technology firm Consensys to develop a prototype of the shared ledger.
- The new platform aims to enable instant, 24/7 cross-border payments at a large scale, improving on current systems.
Swift's Strategic Shift to Blockchain Technology
Swift, the co-operative that underpins the global financial messaging system, is making a significant move into blockchain technology. The organization stated on Monday that it is creating a shared digital ledger to improve how international payments are processed. This platform is designed specifically to handle transactions involving tokenized products, a category that includes stablecoins.
The goal is to enhance the efficiency and speed of cross-border transactions. According to Swift, the blockchain will be used to accurately "record, sequence and validate transactions." It will also leverage smart contracts to automatically enforce predefined rules, reducing the need for manual intervention and potential for errors.
This initiative brings together some of the world's largest financial institutions. Bank of America, Citigroup, and NatWest are among the initial partners working with Swift to test and develop the new system. Their involvement signals a serious commitment from the traditional banking sector to adapt to the changing financial landscape.
What is Swift?
Headquartered in Belgium, the Society for Worldwide Interbank Financial Telecommunication (Swift) is a member-owned cooperative. It provides the primary messaging network that allows more than 11,500 banks and financial institutions across the globe to send and receive information about financial transactions in a secure and standardized way.
Responding to the Rise of Stablecoins
The development of a new blockchain platform by Swift is widely seen as a direct response to the competitive threat posed by the cryptocurrency industry, particularly stablecoins. The stablecoin market has grown to a valuation of approximately $300 billion, with companies like Tether and Circle leading the sector.
Stablecoins present a fundamental challenge to payment intermediaries like Swift. They allow users to transfer funds directly between each other on a blockchain network, bypassing the traditional banking system. This disintermediation can result in faster and cheaper transactions, an attractive proposition for users accustomed to the delays and fees of conventional cross-border payments.
Legacy System Challenges
A 2024 report from McKinsey highlighted the vulnerabilities of traditional payment systems. The report noted that stablecoins represent "a direct challenge to traditional global payments rails" because legacy transactions can take up to five days to settle, involve multiple intermediaries, and often rely on manual regulatory checks.
Swift's move aims to counter these advantages by integrating the benefits of blockchain technology into its established and trusted network. The organization has stated its new system will make "instant, always-on cross-border transactions possible at unprecedented scale."
A Global Push for Digital Currency Integration
Swift's announcement comes at a time of significant movement in the digital currency space by both regulators and financial institutions. In July, the United States passed landmark legislation to regulate the stablecoin industry. This regulatory clarity has encouraged major banks, including JPMorgan Chase and Citi, to actively explore launching their own dollar-pegged stablecoins.
The trend is not limited to the U.S. In Europe, a consortium of nine banks, including UniCredit, ING, and Danske Bank, recently revealed plans to jointly launch a euro-denominated stablecoin. Their target for launch is the second half of 2026, as they seek to compete with the predominantly dollar-based stablecoin market and explore the token for their own transactions.
These developments indicate a broader industry acceptance of tokenized assets and a race to establish new infrastructure to support them. Swift's project is a critical effort to ensure its network remains central to international finance as it becomes increasingly digital.
Partnership and Prototyping Phase
To build its blockchain platform, Swift is partnering with Consensys, a prominent blockchain technology company. Consensys is led by Joseph Lubin, a co-founder of the Ethereum network, which is the second-largest cryptocurrency platform and a pioneer in smart contract technology. This partnership brings deep technical expertise to the project.
The initial phase of the collaboration will focus on creating a prototype of the shared digital ledger. Once the prototype is ready, Swift and its partner banks will begin a testing phase. This testing will help determine the specific types of transactions, currencies, and international corridors the platform should prioritize for its initial launch.
Swift aims for its new platform to provide "full predictability on price and speed for retail transactions — with no hidden fees, full value transfers and instant settlement."
This development is part of a wider effort by Swift to modernize its services. The organization also recently announced initiatives to improve transparency and predictability around fees for payments made through its existing network, another move designed to keep pace with the innovations offered by fintech and crypto competitors.
