"SWIFT - aka the Society for Worldwide Interbank Financial Telecommunication - provides a messaging service that financial institutions use to move money around the world. The service is widely used but is slow because, as explained by ANZ Bank, SWIFT "doesn't actually move the money." "This means the instruction to pay and the movement of funds happen separately, often requiring a complex network of accounts and correspondent banks to enable a payment to be processed."
"Blockchain enthusiasts who saw cryptocurrency transactions rapidly rippling across distributed ledgers, therefore wondered if their preferred technology could improve the speed of cross-border cash transfers. Many startups, some with support from sensible central banks, have explored this idea, usually by proposing "stablecoins" - digital currencies pegged to the value of a fiat currency - which would be exchanged on a blockchain to provide faster settlements than SWIFT can achieve."
Thirty banks and SWIFT adopted blockchain to mainstream distributed ledger technology into global finance. SWIFT provides messaging for cross-border payments but does not transfer funds, causing separate instruction and settlement steps that require correspondent accounts and create delays and limited visibility. Cross-border transfers can take days as a result. Blockchain proponents proposed stablecoins and other ledger-based mechanisms to enable faster settlement by exchanging digital tokens pegged to fiat. China is exploring a Digital Yuan for rapid cross-border transactions in yuan, potentially shifting trade settlement away from the US dollar and challenging incumbent systems.
Read at Theregister
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