SWIFT, the global interbank messaging network, is finally moving forward to test its on-chain messaging system on Linea, the Layer 2 blockchain developed by Consensys after months of negotiating. Several major banks, including BNP Paribas and BNY Mellon, will take part in the multi-month trial.
The test aims to explore how blockchain could improve speed and how easy the system can be programmed for international payments. According to a report by BigWhale, the banks will also test how stablecoin can be used to support tokenized transactions.
“The project will take several months to see the light of day, but it promises a major technological transformation for the international interbank payments industry,” a source at one participating bank told reporters.
SWIFT’s decision to carry out this test is due to the growing interest in how blockchain technology be used in the process of traditional banking. So instead of sending multiple messages between accounts, transactions could just be recorded as single on-chain payments. Banks hope this will reduce costs and allow smoother connections with other tokenized financial assets, such as bonds and shares.
The interbank network connects more than 11,000 institutions around the world handling billions of messages every year. But SWIFT does not move the money itself, it only sends standardized payment instructions. Money flows through accounts held between banks, known as nostro and vostro, or through national settlement systems.
For example, if a French company pays a Brazilian supplier, SWIFT sends a standard message called MT103. The supplier’s bank gets the message and processes the payment. This system works but can be slow because it depends on many steps and relays.
Why did Swift choose Linea?
Linea, a Layer 2 network built on Ethereum, was reportedly chosen for its cryptographic privacy capabilities. This allows participating banks to test blockchain functionalities without exposing sensitive commercial information.
Currently, the pilot is exploratory, with technical challenges integrating with existing banking systems to be solved. The project brings together leading institutions, giving them an early view of how the world of international payments could change
Sources indicate that the trial could eventually enable payments and settlements to merge into one secure on-chain transaction, transforming how banks move money internationally.
