World-wide platform connecting most of the global banks has begun building a blockchain application to simplify cross-border payments.
Announced today, The Society for Worldwide Interbank Financial Telecommunication (Swift) is integrating open-source blockchain technology with its own products to build a proof-of-concept that might one day replace the so-called “nostro” accounts its members keep filled with cash all over the world – just in case they need it.
If successful, the blockchain application has the potential to finally achieve a longstanding dream of Swift, to free up that cash so it can be invested in more profitable measures.
Currently, Swift’s network of 11,000 financial institutions monitor their accounts around the world using the platform’s existing debit and credit updates via end-of-day statements.
Specifically, Swift hopes to reduce the costs of reconciliation between independent databases maintained by the inter-bank platform’s members, reduce operational costs and free up liquidity for other investments.
The experiments appear to be part of a larger exploration of various blockchain solutions.
An earlier blockchain POC designed to test the potential benefits and plausibility of moving the ISO 20022 standard to a blockchain, for example, was built using open-source Monax’s codebase.
This most recent blockchain proof-of-concept will leverage the open-source Hyperledger codebase, being developed by a consortium of businesses, of which Swift is a member.
The POC will also consist of a private blockchain for invited members with specific user profiles and “strong” data controls. Last year, banking consortium R3CEV and a dozen of its member banks tested Ripple’s native asset, XRP, to serve a similar function.
In Swift’s case, though, only authorized members will be able to access the POC, which will be integrated with Swift’s own identity management platform and its public key infrastructure (PKI), a security architecture based on cryptographically verified digital signatures.
