In an initial proof-of-concept, Chainlink, a source of price feeds and other information on blockchains, and SWIFT, the interbank messaging system that allows cross-border payments, are collaborating on a cross-chain interoperability protocol (CCIP).
The interbank network will be able to interact across all blockchain systems thanks to CCIP, which will make it possible for SWIFT messages to specify on-chain token transfers.
After winning a SWIFT-hosted startup competition and creating a proof-of-concept system for successful bond issuance and redemption, Chainlink and SWIFT started working together.
Role of Proof-of-concept
According to Nazarov, the POC makes use of Chainlink’s Cross-Chain Interoperability Protocol (CCIP), which enables SWIFT messages to instruct token transfers across almost every blockchain network. This will hasten the adoption of distributed ledger technology (DLT) blockchains in traditional finance and the capital markets.
With over 11,000 banks worldwide connected, the SWIFT interbank messaging system is the most popular platform for conventional cross-border fiat transactions. The system recorded 44.8 million messages per day on average in August.
The organization has been looking into blockchain, DLT, and central bank digital currencies (CBDCs) in order to enable speedier payments, as transactions on the SWIFT network can take several days to complete.
Without replacing, building, and integrating new connectivity into old systems—which would require significant changes and an “exceptionally high” cost, according to Chainlink—financial institutions can now use blockchain technology.
