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- SWIFT successfully carries out a handful of successful blockchain experiments unlocking the potential of tokenization.
- Tom Zschach, the Chief Innovation Officer of Swift expands on the relevance of these experiments and its approach to advancing tokenization.
SWIFT has revealed that the last few years were spent conducting experiments geared towards spotlighting the significance of tokenization. SWIFT goes on to explain that with more than a dozen major financial institutions, it has depicted in various ways the importance of the SWIFT network. Facilitating the transfer of tokenized assets across multiple public and private blockchains is one of the key functions of SWIFT at this time.
Exciting news! Together with more than a dozen major financial institutions, we’ve successfully shown how the #Swift network can facilitate the transfer of tokenised assets across multiple public & private #blockchains.
𝗟𝗲𝗮𝗿𝗻 𝗺𝗼𝗿𝗲: https://t.co/L0o6meHXfd pic.twitter.com/VVtt1VnJZc— Swift (@swiftcommunity) August 31, 2023
It is worth noting that tokenization, despite gaining popularity, is still in its infancy. However, adoption has regrown so much that 97 percent of institutional players are convinced that tokenization has the capacity to revolutionize asset management, and function as a positive force in the entire industry.
Tokenization offers a handful of benefits, including increased efficiency and a significant reduction in cost. In addition, tokenization also offers more inclusive investing through fractional ownership. Institutional players are counting on all of these qualities to boost the technology’s dominance in the market.
It is still worth noting that despite how promising tokenization is, it has its limitations at present. One of the issues that investors and institutions are currently facing is that tokenized assets are currently managed on different blockchain networks at this time. All these tokenized assets currently have their own functional and liquidity profile.
The Chief Innovation Officer of SWIFT can fix one of tokenization’s most pressing issues
The solution to this problem is interoperability, Swift remarks in a recent blog post, explaining that interoperability between these blockchains is also necessary to avoid the burden of financial institutions building connections with each platform, which could potentially lead to significant operational costs and challenges.
In a bid to tackle this challenge and bridge the gap, SWIFT highlights some of the steps it’s been taking;
In our latest experiments, we’ve been able to successfully demonstrate that our infrastructure can provide a single point of access to multiple networks using existing, secure infrastructure. This could significantly reduce operational challenges and the investment required for institutions to support the development of tokenised assets.
Apparently, these experiments are a significant part of SWIFT’s wider strategy to ensure secure, global interoperability as a new technology and platform emerges. These experiments currently build on the work that the firm has embarked on over the past few years, to demonstrate how infrastructure could support the financial community, particularly in the form of connecting Central Bank Digital Currencies (CBDCs) and other digital assets with new and existing payment systems. Tom Zschach, the Chief Innovation Officer of Swift explained;
Our experiments have demonstrated clearly that existing secure and trusted Swift infrastructure can provide that central point of connectivity, removing a huge hurdle in the development of tokenisation and unlocking its potential.
