SWIFT to Test Live Digital Currency Transactions Next Year, Reports Reuters

By Alun John

LONDON – The global banking messaging network SWIFT announced on Thursday that it will begin live trials of tokenised assets and digital currencies in the upcoming year. This development marks a critical advancement in the gradual integration of these assets into the broader financial ecosystem.

Financial institutions, including banks and asset managers, have been investigating the "tokenisation" of traditional assets, such as bonds, for several years now. The goal is to leverage digital units—often based on blockchain technology—that represent ownership of the underlying asset. This approach aims to make trading faster, less expensive, and more efficient, primarily by eliminating intermediaries involved in many transactions.

Despite these efforts, tokenised assets have yet to achieve significant momentum in the broader market. Approximately 90% of the world’s central banks are currently experimenting with central bank digital currencies (CBDCs), which are digital representations of fiat currencies that facilitate the trading of tokenised assets. These monetary authorities are striving to keep pace with technological advancements that have enabled cryptocurrencies like bitcoin.

SWIFT, which plays a pivotal role in global finance, has been actively testing both CBDCs and tokenised assets. In March, it announced plans to launch a platform that would integrate CBDCs currently being developed with the existing financial infrastructure.

Nick Kerigan, SWIFT’s head of innovation, noted, "We see industry demand to move out of that trial phase and observe a digital asset being transferred, with a counterparty making real monetary payments." He emphasized that next year’s trials will proceed in a controlled manner.

While the potential for this technology is significant, the fragmented nature of the market is a barrier to progress, with few initiatives advancing beyond internal bank systems. Central banks are also exploring wholesale CBDCs for cross-border payments, albeit within small, controlled groups.

SWIFT’s latest initiative involves various types of digital assets interacting across different platforms. Kerigan stated, "To successfully trade and settle a tokenised bond transaction, one needs both cash and that’s where a tokenised deposit or wholesale CBDC comes into play. It’s insufficient to have just delivery or payment; both elements are essential."