SWIFT Introduces Comprehensive Ledger Framework for Digital Assets

SWIFT has introduced a proposal for a universal shared ledger aimed at enhancing the recording of digital payments and assets while improving collaboration among various market participants. This innovative system will utilize an ISO-20022 messaging layer, leveraging SWIFT’s Transaction Manager as a centralized access point to multiple blockchain networks.

Analysts at SWIFT have put forward a new idea for a shared ledger that could potentially upgrade the current framework for documenting digital asset transactions. They specifically recommend employing the SWIFT infrastructure as a singular access point to various blockchain networks.

SWIFT analysts emphasized the undeniable necessity of implementing a shared ledger concept for digital assets, as there is presently no system capable of consolidating fragmented transaction information. A shared ledger would facilitate:

• the reduction of risks and expenses in the market;
• the immediate transfer of value and atomic settlement for DvP and PvP transactions;
• the minimization of reconciliation requirements among financial institutions;
• the development of additional services on the shared platform, enhancing its functionality and attractiveness to users;
• the acceleration, predictability, and accessibility of cross-border payments while lowering fee costs.

The Transaction Manager service from SWIFT, which is based on ISO-20022 messaging technology, is proposed as a mechanism to connect financial institutions within a shared network, ensuring a dependable level of messaging. This shared ledger is expected to be universal for most financial institutions, allowing them to utilize it as an accounting tool. The system built upon it will facilitate the registration of balance sheet data, as well as the confirmation and documentation of settlements. Essentially, SWIFT presents an opportunity to serve as a conduit for transmitting data regarding digital asset transactions, which are recorded on the balance sheets of various institutions across different financial networks.

It is important to highlight that the concept of a shared ledger has been actively examined and discussed by numerous regulators and financial market participants over recent years. For instance:

1. Analysts from the BIS referenced the initiative in their 2023 annual economic report, where the regulator characterized a shared ledger as a new potential form of financial market infrastructure.
2. The Monetary Authority of Singapore (MAS) unveiled the Global Layer One (GL1) initiative, designed to facilitate cross-border transactions through open digital infrastructure.
3. The New York Innovation Center (NYIC) of the Federal Reserve Bank of New York is investigating a unified payment system, referred to as a Regulated Liabilities Network (RLN).
4. Citigroup is also experimenting with the RLN infrastructure to tokenize commercial cash.
5. The International Monetary Fund (IMF) is pursuing an initiative to enhance cross-border payments based on the X-C platform, which employs the concept of a shared ledger as its foundation.

SWIFT is actively assessing the interoperability of various blockchain networks within its infrastructure and is developing technical solutions for cross-border payments in CBDCs.

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