TBW - Exclusive. SWIFT launches on Linea to test its "on-chain" model
SWIFT is accelerating its move into blockchain. According to our information, the interbank network has chosen Linea, the layer 2 developed by the American company Consensys, to experiment with the transition of its messaging system "onchain". More than a dozen banks are taking part in the trial, including BNP Paribas and BNY Mellon.
"The project will take several months to see the light of day, but it promises a major technological transformation for the international interbank payments industry," blows out a source at one of the banks taking part.
Also according to our information, SWIFT, which brings together 11,000 banks, is also working on an "interbank token".
Created in the 1970s, SWIFT is not a bank or a payment system as such. It is a secure messaging system that enables financial institutions to exchange payment instructions in a standardised format. Each institution has a unique code, called a BIC or SWIFT code, which enables it to be identified.
When a French company needs to pay a Brazilian supplier, for example, the buyer's bank sends a message in MT103 format via SWIFT to the seller's bank, or to a correspondent bank if they do not have a direct relationship. The money itself does not circulate on SWIFT: it transits via the accounts that the banks hold between them, called nostro/vostro, or via the national settlement systems.
This architecture has made SWIFT the backbone of international finance, with more than 11,000 institutions connected and billions of messages exchanged every year. But it remains cumbersome, dependent on multiple relays, and relies on a centralised infrastructure.
Why Linea?
It is in this context that SWIFT is interested in blockchains. According to our information, the banking consortium believes that these technologies could offer greater speed, transparency and programmability in the processing of payments, without calling into question the need for strict controls.
The choice of Linea, an Ethereum second-layer network, is not insignificant. Developed by Consensys, Linea focuses on transaction confidentiality through the use of advanced cryptographic proofs.
>> Fundamental analysis of Linea
A decisive asset for SWIFT and its partners, keen to reconcile the promises of blockchain with the bank's imperatives, particularly in terms of data protection and regulatory compliance.
>> Sharplink, the arm of Consensys and Linea
What blockchain could change
In a future scenario, an international transfer might no longer involve a succession of messages and corresponding accounts. The payment instruction and its settlement could be merged into a single on-chain transaction, validated simultaneously by network participants.
A payment between a European bank and an Asian bank could, for example, be recorded on Linea as a secure transaction, with real-time visibility of its progress, reduced costs and increased interoperability with other tokenised financial assets (bonds, shares, stablecoins).
>> Nine European banks join forces to launch a euro stablecoin
The announcement does not, however, mark an immediate changeover. Our banking sources suggest that it will take several months of development and testing before it goes live for the first time. The technical challenges are numerous: interconnection with existing banking systems, compliance with compliance standards, robustness of confidentiality mechanisms.
For the time being, therefore, this is an exploratory pilot, but it is already mobilising a small circle of leading financial institutions that see it as an opportunity to prepare for a possible transformation of the global payments infrastructure.
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