Banking messaging network Swift recently shared a report highlighting how Swift connects with blockchains and solves interoperability issues between different blockchain networks.
In a report titled “Connecting Blockchains: Overcoming Fragmentation of Tokenized Assets,” Swift Summarize An incremental approach of interconnecting existing systems with blockchains is “more likely to be critical for short-term market development than integrating central bank digital currencies (CBDCs), tokenized deposits, and assets into a unified ledger.” reasonable”.
In the report, Swift highlighted the “lack of secure interoperability” between different blockchain networks. The financial giant says this leads to all sorts of inefficiencies and a poor user experience. However, the financial institution believes that Swift has the potential to solve interoperability issues.
Working with several financial institutions and blockchain oracle network provider Chainlink, Swift said it was able to demonstrate its ability to provide a single point of access to multiple networks using existing infrastructure. This significantly reduces the operational challenges and costs for institutions supporting tokenized assets, Swift said.
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Tokenization can reach its full potential once institutions can connect to the entire financial ecosystem, Swift chief innovation officer Tom Zschach said in a release. Zach explained:
“Our experiments clearly demonstrate that existing secure and trusted Swift infrastructure can provide a central point of connectivity, removing a significant barrier to tokenization development and unlocking its potential.”
In the report, Swift pointed to a number of potential benefits of tokenization, including increased liquidity and automation as well as enhanced transparency and security.
Beyond that, Banking Infrastructure emphasized that while tokenization has its benefits, it also has significant hurdles, such as legal and regulatory frameworks that are still being developed. Swift said this remains a challenge for institutions trading tokenized assets.
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