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The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has recently articulated its vision for integrating with a tokenized future, emphasizing the crucial role of a messaging layer within tokenized payment systems. This approach is designed to merge the solid strengths of the messaging services of SWIFT with the creative potential of shared ledger technology.
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SWIFT has observed rapid advancements in fintech, particularly in the area of tokenization and the development of shared ledger models. The organization, as a result, recognizes the ability of shared infrastructure to deliver live balance updates to all participants in a shared ledger. SWIFT, however, also highlights the drawbacks of shared ledgers in processing huge data volumes. This limitation illustrates the need for a messaging layer that is capable of supporting transactions and data-intensive latter-day financial services, including compliance, anti-money laundering (AML) measures, and sanctions screening.
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The proposal from SWIFT presents an opportunity to utilize its already-in-place ISO-20022 messaging technology as the foundation of a new type of payment model that merges the best of both centralized and decentralized systems. This model assumes a state machine that can dynamically mirror the transaction and balance statuses within several institutions, that is, possibly built on a blockchain technology or centralized platform such as SWIFT Transaction Manager. This kind of hybrid approach seeks to enable a smooth switch to the tokenized payment systems while also taking care of the regulatory needs and effective processing of financial transactions.
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By advocating for a place within tokenized payment systems, SWIFT seeks to merge the gap that exists between traditional banking transactions and the new digital financial infrastructure that is gaining popularity.
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