Financial institution messaging community Swift has not too long ago shared a report highlighting how Swift can join with blockchains and remedy the problem of interoperability between totally different blockchain networks.
In a report titled “Connecting blockchains: Overcoming fragmentation in tokenised belongings,” Swift concluded {that a} extra incremental method that interlinks present techniques to blockchains is “extra believable” for market improvement within the close to time period, in comparison with bringing collectively central financial institution digital currencies (CBDCs), tokenized deposits and belongings in a single unified ledger.
Swift highlighted within the report that there is a “lack of safe interoperability” between totally different blockchain networks. The monetary large stated that this results in varied inefficiencies and poor consumer expertise. Nonetheless, the monetary establishment believes that there’s potential for Swift to resolve the interoperability downside.
Working with varied monetary establishments and blockchain oracle community supplier Chainlink, Swift stated that it was in a position to showcase its means to offer a single level of entry to a number of networks utilizing present infrastructure. In keeping with Swift, this considerably reduces operational challenges and prices for establishments to assist tokenized belongings.
Associated: Singapore central financial institution says three enterprise days is ‘well timed switch’ for stablecoins
In a press launch, Swift’s chief innovation officer Tom Zschach stated that tokenization can attain its full potential as soon as establishments can connect with the entire monetary ecosystem. Zschach defined:
“Our experiments have demonstrated clearly that present safe and trusted Swift infrastructure can present that central level of connectivity, eradicating an enormous hurdle within the improvement of tokenization and unlocking its potential.”
Throughout the report, Swift pointed towards many potential advantages of tokenization, which embody elevated liquidity and automation in addition to enhanced transparency and safety.
Aside from these, the banking infrastructure highlighted that whereas tokenization has its advantages, it additionally has vital hurdles equivalent to authorized and regulatory frameworks being nonetheless below improvement. In keeping with Swift, this stays a problem for establishments when diving into making tokenized asset transactions.