International payments cooperative Swift will launch a permissioned blockchain to route transactions among global banks as part of a bid to modernize cross-border payments and blunt the rise of dollar-pegged stablecoins.
The project will be developed with Consensys and piloted alongside Bank of America, Citigroup and NatWest, among others, the Financial Times reported.
Swift says the shared ledger will support tokenized instruments, including bank-issued stablecoins, and use smart contracts to record, order and validate transfers while enforcing business rules. The group, which connects more than 11,500 institutions worldwide, argues the platform can enable “instant, always-on” payments at global scale.
The move comes as the roughly $300bn stablecoin sector, led by Tether and Circle, gains traction as an alternative to traditional payment rails. Recent U.S. legislation establishing a regulatory regime for payment stablecoins has further galvanized bank interest in issuing tokens and experimenting with blockchain settlement, the FT said.
Consultancies have warned that stablecoins present a direct challenge to legacy cross-border systems because they can settle near-instantly with fewer intermediaries and more automated compliance checks. That critique has added urgency to incumbents’ efforts to retool their infrastructure.
Read more at the Financial Times