• Home
  • Bitcoin
  • Ethereum
  • Blockchain
  • Cryptocurrency Hackers
  • Ripple
  • Litecoin
  • Contact Us
Newsletter
Crypto Hoarding
  • Home
  • Bitcoin
  • Ethereum
  • Blockchain
  • Cryptocurrency Hackers
  • Ripple
  • Litecoin
  • Contact Us
No Result
View All Result
  • Home
  • Bitcoin
  • Ethereum
  • Blockchain
  • Cryptocurrency Hackers
  • Ripple
  • Litecoin
  • Contact Us
No Result
View All Result
Crypto Hoarding
No Result
View All Result
Home Blockchain

How blockchain is shaking Swift and the global payments system – Financial Times

Admin by Admin
July 22, 2021
in Blockchain
0
190
SHARES
1.5k
VIEWS
Share on FacebookShare on Twitter

Last month, the Brussels-based utility called the Society for Worldwide Interbank Financial Telecommunication (Swift) announced that six global banks had embraced its plan to upgrade cross-border payment systems.

So far, so boring, many might think. Payment processes rarely grab public or political attention, unless they go wrong. In that sense they are like household plumbing.

Related articles

Google invested a whopping $1.5B into blockchain companies since September – Cointelegraph

August 16, 2022

Are Blockchain Bridges Safe? Why Bridges Are Targets of Hacks – CoinDesk

August 16, 2022

But investors should wake up. For this joint initiative (together with the Bank of China, Citi, Bank of New York Mellon, Deutsche, Standard Chartered and BNP Paribas) is one sign of a potentially vicious battle now erupting due to the rise of cryptocurrencies and the technology behind them.

The wider public tends to view digital tokens, such as bitcoin, primarily in terms of whether they can act as a store of value and medium of exchange. Many politicians are simultaneously caught up in the emerging debate around the potential of central bank digital currencies.

But what is equally important — and often overlooked — in all of these conversations is what blockchain and the cryptocurrencies it supports could do to financial plumbing, not just inside countries but between them. This could reshape not just finance, but US geopolitical leverage as well.

Swift is currently both a crucial linchpin of global finance and a peculiarity which seems ripe for disruption. It first sprang to life back in 1977, when American and European banks created a jointly-owned utility to perform correspondent banking services. (As an admirably lucid new book, The Pay Off, explains, this occurred because Citi was developing a proprietary payments network, and its rivals hated the idea of a monopoly sitting in private hands.)

Today Swift remains a non-profit co-operative, with 11,000 members and facilitating payments worth an eye-popping $1.5tn a day. It does this not by actually moving money, but by enabling banks to dispatch messages that credit or debit their accounts as payments occur.

This makes it akin to an electronic post system. Swift officials, however, prefer to dub it the world’s large “fintech”. Maybe so. But its Achilles heel is that it is anything but “swift”. On the contrary, The Pay Off notes that until recently Swift’s payments were slow, its costs high and the utility slow to embrace innovation because it had a bureaucratic culture and weak governance structure.

Unsurprisingly, this has prompted fintech upstarts, such as Ripple and Facebook’s Diem project, to create plans to challenge Swift with innovations such as distributed ledger technology (“blockchain”). 

Some of Swift’s own members are also challenging it. JPMorgan, for example, is developing a particularly bold blockchain initiative system called Onyx with a messaging system called Liink. This is already moving “billions each day’, according to officials.

Meanwhile, the Russian and Chinese governments are reportedly creating rival platforms, since countries subject to US sanctions, such as Iran, have occasionally been excluded from the network. (Gottfried Leibbrandt, the former Swift head and co-author of The Pay Off, recently explained to an FT forum that while the utility is technically independent, Washington has sanction power because half of Swift’s payment flows are in dollars.)

Will these challenges topple Swift? Definitely not in the short term. Even if Russia and China build rival systems, it is unlikely others would choose to rely on these in a world where the overwhelming majority of global trade is currently invoiced in dollars. And while fintech start-ups are performing small-value, cross-border retail payments — and aim to dominate specific niches — none have any scale, yet. 

Moreover, the key thing to understand about platforms such as the ambitious JPMorgan Onyx/Liink system is that they are “closed loop”, as opposed to Swift’s open system. Rivals thus have an incentive to collaborate with Swift to promote interoperability. Fintech is a world of frenemies.

But even if short-term challenges can be fended off, the long term is uncertain. It is very unlikely that the US Treasury would choose to let Swift be disintermediated, given its geopolitical significance. Washington and Wall Street thus have a joint incentive to help the utility fend off competition, by following others’ innovations.

And Swift is trying to do precisely that. Four years ago it introduced one big upgrade: a new “global payments innovation” to improve processes. The recent announcement in partnership with the banks is supposed to deliver more digital capabilities in November 2022.

A 15-month plan, however, looks achingly slow to anyone in Silicon Valley — or in Beijing, which is racing ahead with its digital currency. Swift’s ambitions also seem modest compared to the promise of blockchain.

So the issue being fought over in Brussels is not just one of technical and geopolitical importance — must cross-border payments occur via messages? Should America weaponise dollar flows? — but also commercially critical. Can an incumbent monopoly ever effectively steal from disrupters?

The fact that the answers are uncertain is unnerving. And more important than the hype around cryptocurrencies.

[email protected]

Weekly newsletter

For the latest news and views on fintech from the FT’s network of correspondents around the world, sign up to our weekly newsletter #fintechFT

Sign up here with one click

Share76Tweet48

Related Posts

Google invested a whopping $1.5B into blockchain companies since September – Cointelegraph

by Admin
August 16, 2022
0

Google invested a whopping $1.5B into blockchain companies since September  Cointelegraph

Are Blockchain Bridges Safe? Why Bridges Are Targets of Hacks – CoinDesk

by Admin
August 16, 2022
0

Are Blockchain Bridges Safe? Why Bridges Are Targets of Hacks  CoinDesk

How Blocks Are Added to a Blockchain, Explained Simply – CoinDesk

by Admin
August 16, 2022
0

How Blocks Are Added to a Blockchain, Explained Simply  CoinDesk

Jump Crypto Picked to Revamp Solana to Make Blockchain More Reliable – CoinDesk

by Admin
August 16, 2022
0

Jump Crypto Picked to Revamp Solana to Make Blockchain More Reliable  CoinDesk

Philippines: Blockchain-based solution Twala receives P4.6M grant from DOST – CoinGeek

by Admin
August 16, 2022
0

Philippines: Blockchain-based solution Twala receives P4.6M grant from DOST  CoinGeek

Load More
  • Trending
  • Comments
  • Latest
Major Changes Coming to XRP Ledger As Ripple-Backed Startup Launches Key Amendment in Beta Testnet – The Daily Hodl

Major Changes Coming to XRP Ledger As Ripple-Backed Startup Launches Key Amendment in Beta Testnet – The Daily Hodl

April 21, 2021

SteveWillDoIt reveals hacker stole his crypto wallet: “I lost a lot of money” – Dexerto

July 26, 2021
Forte’s PTI gets financial transaction licenses for blockchain games – VentureBeat

Forte’s PTI gets financial transaction licenses for blockchain games – VentureBeat

February 11, 2022

Blockchain Use in Supply Chain Leads to Greater Benefits – The National Law Review

August 25, 2021

Google invested a whopping $1.5B into blockchain companies since September – Cointelegraph

0

Rivals Ripple and R3 partner up | PaymentsSource – American Banker

0
Ripple seeks shelter in D.C. from Libra’s political storm – American Banker

Ripple seeks shelter in D.C. from Libra’s political storm – American Banker

0

Litecoin Gets Bullish Speculation, at Last, as Upgrade Approaches – Coindesk

0

Google invested a whopping $1.5B into blockchain companies since September – Cointelegraph

August 16, 2022

Market Wrap: Bitcoin’s Price Retraces Again, Breaks Below Trendline – CoinDesk

August 16, 2022

Are Blockchain Bridges Safe? Why Bridges Are Targets of Hacks – CoinDesk

August 16, 2022

Ethereum [ETH] short-term traders can celebrate next week if… – AMBCrypto News

August 16, 2022
Crypto Hoarding

We bring you the best Premium WordPress Themes that perfect for news, magazine, personal blog, etc. Check our landing page for details.

Categories tes

  • Bitcoin
  • Blockchain
  • Cryptocurrency Hackers
  • Ethereum
  • Litecoin
  • Ripple

Newsletter

[mc4wp_form]

  • Home
  • Bitcoin
  • Ethereum
  • Blockchain
  • Cryptocurrency Hackers
  • Ripple
  • Litecoin
  • Contact Us

© 2017 JNews - Crafted with love by Jegtheme.

No Result
View All Result
  • Home
  • Bitcoin
  • Ethereum
  • Blockchain
  • Cryptocurrency Hackers
  • Ripple
  • Litecoin
  • Contact Us

Copyright (c) 2021 - Crypto Hoarding - All Rights Reserved - web design by TechyRack