The Society for Worldwide Interbank and Financial Telecommunication (“Swift”) plans to begin live trials of digital asset trading in 2025, moving from a previous experimental phase to practical applications. This strategic move aims to simplify the transfer of digital assets, including tokenized deposits and central bank digital currencies (“CBDC”), between different blockchain platforms.

Exciting news! Starting next year, financial institutions from around the world will start trialling live digital asset and currency transactions on the Swift network.

This marks an important milestone in our journey to enable banks to transact interchangeably across both… pic.twitter.com/70BxOMoBpT

— Swift (@swiftcommunity) October 3, 2024

Starting in 2025, banks in North America, Europe and Asia will be able to conduct real-time trials of digital asset and currency transactions over the Swift network, according to the statement. These trials will demonstrate how financial institutions can use current Swift to connect existing and emerging assets and currency types for swap transactions. The upcoming trials will establish links between central banks and commercial banks, facilitate real currency transfers, and potentially accelerate the integration of blockchain technology in institutional finance.

Swift intends to leverage its existing infrastructure to develop a unified interface for various digital asset classes to improve transaction efficiency.

Nick Kerigan, head of innovation at Swift, highlighted the growing need for concrete transactions in the digital asset space. He noted in March that effective trading and settlement of tokenized bonds requires a solid delivery and payments framework, emphasizing the need to integrate tokenized deposits and CBDC into the financial landscape.

This initiative comes at a critical time, with more than 90% of the world’s central banks actively researching the implementation of a CBDC. Currently, 134 countries are exploring CBDC, and Standard Chartered and Synpulse predict that the tokenized asset market will be as high as $30 trillion by 2034.

Swift’s efforts to enable real-money transactions through blockchain technology align with a broader movement by central banks to incorporate digital currencies into their operations, further bridging the gap between traditional finance and emerging digital assets.

Building a secure and scalable future for digital assets

Swift aims to leverage its central position in the financial system, connecting disparate networks and existing fiat currencies to facilitate seamless transactions that combine digital assets with traditional forms of value. Swift said in a statement that the trials are designed to address a key challenge in the evolving digital asset market: disconnected digital platforms, or "digital silos," which can hinder wider adoption and ease of use of new forms of value. .

The trial will also evaluate how Swift can provide a unified access point across multiple digital asset classes and currencies to address a major challenge in the rapidly evolving digital asset market: the lack of interoperability between platforms. Without this connectivity, global adoption of digital assets remains fragmented.

Swift has demonstrated its ability to transfer tokenized value between public and private blockchains, connect CBDCs globally, and integrate various digital assets and cash networks. Swift Chief Innovation Officer Tom Zschach said the network’s broad global reach enables it to bridge emerging and established forms of value.

The Hong Kong Monetary Authority and the Bank of France are leveraging Swift’s capabilities for ongoing experiments in foreign exchange use cases as part of the European Central Bank’s initiative to explore new technologies for large-value payments. Additionally, Swift is investigating how its connectivity capabilities can integrate emerging bank-led networks, such as the U.S. Regulatory Settlement Network, with traditional financial systems.

Swift was also recently named as a participant in Project Agora, a Bank for International Settlements-led effort exploring the integration of tokenized commercial bank deposits and tokenized CBDC on a unified platform.

Swift said, “We are committed to ensuring that our global network of more than 11,500 financial institutions can securely and efficiently connect supported digital assets and currencies through existing Swift connections. We believe these experiments and collaborative innovations are the key to achieving A critical step in the global interoperability of these new forms of value, and our global network is an important bridge between traditional and digital asset platforms.”

"Swift plans to launch real-time trials of digital asset transactions in 2025 to promote the integration of CBDC and traditional finance." This article was first published on (Block Guest).