SWIFT, the Society for Worldwide Interbank Financial Telecommunication, is launching a pilot project with a blockchain enterprise company Symbiont.
The project will include giants like Citigroup Inc, Vanguard, and Northern Trust and will help improve communication between “significant corporate events,” according to a post reviewed by Bloomberg.
The main goal behind the collaboration is to automate the workflow, which will be done with Symbiont’s tool called Assembly. Using Symbiont’s blockchain and smart contracts, SWIFT will be able “create a network effect that leverages our 11,000 plus institutions connected to SWIFT globally,” the post states.
Symbiont blockchain will review corporate action data uploaded by SWIFT’s translator tool and compare it with the information provided by the participants for “discrepancies, contradictions or inconsistencies across custodians.”
“By bringing Symbiont’s Assembly and smart contracts together with SWIFT’s extensive network, we’re able to automatically harmonize data from multiple sources of a corporate action event. This can lead to significant efficiencies,” Chief Innovation Officer at SWIFT Tom Zschach said in the post.
Creating a connected global financial system
The Society for Worldwide Interbank Financial Telecommunication is a messaging network used by financial institutions all over the globe to securely submit information with a standardized system of codes. It was created in 1973 in Belgium and now contains over 11,000 banks and other financial institutions in over 200 countries in its network.
Earlier this year, SWIFT announced it would be conducting cross-border tests for central bank digital currencies (CBDCs) to “take the next step towards seamless cross-border payments involving digital currencies.” The trial run would be performed with the help of a tech platform Capgemini.
The announcement followed research on the impact of CBDCs on the global financial system in collaboration with an international consulting firm Accenture. “SWIFT <..> will play a critical role supporting its members as CBDC begins to transform the landscape,” said David Treat, Senior Managing Director at Accenture, in the research paper.
Cutting off Russia
SWIFT has also played a significant role in an attempt to stop the Russian invasion of Ukraine. The European Union cut off seven major Russian banks, namely VTB, Bank Otkritie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank, and VEB, from the SWIFT system in March.
In May, the biggest Russian bank, Sberbank, was also disconnected from the telecommunication system following another sanctions list. “We hit banks that are systemically critical to … Putin’s ability to wage destruction,” European Commission President commented on the decisions at the time.
Blockchain-based
Meanwhile, Russia seemed to have found a way to avoid sanctions by creating its own blockchain-based platform that could replace SWIFT.
A system called CELLS is said to be designed to connect banks and ensure international payments. It is also believed to provide an opportunity for its customers to create crypto wallets, Russia’s Rostec Group, which is developing the system, said in a statement in June.
For Be[In]Crypto’s latest news, click here.