SWIFT Releases In-Depth Report on Distributed Ledgers

SWIFT has released a 20-page report on Distributed Ledger Technologies (DLTs) that takes a critical look at the current state of the technology as well as the technical and regulatory challenges of implementing DLTs in the financial services space.

The report, SWIFT on distributed ledger technologies, was published with assistance from global consulting firm Accenture. The paper breaks down the exploration of DLTs in several sections: governance, data controls, compliance, standardisation, identify framework, security, reliability and scalability.

According to the report’s “Maturity assessment” estimation, compliance and governance were identified as being the areas of DLTs that are still in the early stages of development.

The report’s Strong governance section states:

“DLTs emerged through cryptocurrencies and use a community self-governing model, and, while it may be seen as fairly effective in that context, we believe that it does not provide the level of trust, transparency and accountability required by the financial industry.”

While the report concludes that many aspects of the technology still need to be refined and explored, SWIFT also highlighted some of its proof of concepts; Identity Asset Management, which uses DLTs to assign digital identities to users; Standing Settlement Instructions, which leverages DLTs in OTC markets; ISO 20022, which applies various standards to DLTs.

As part of its R&D initiatives into distributed ledgers, SWIFT mentioned its involvement with the Linux Foundation’s Hyperledger Project.

“SWIFT is also actively experimenting with technologies in the Ethereum ecosystem of products.”

Fabian Vandenreydt, Head of Securities at Innotribe and the SWIFT Institute, which funds independent fintech research projects said:

“The technology assessment has given us valuable insights into the necessary requirements for DLTs to succeed in financial services. It provides a clear state-of-play, outlining the different factors the technology needs to address, and the current maturity of DLTs in each of these areas.”

Managing director and global head of Accenture’s Capital Markets Blockchain division, David Treat, said that the industry has a “strong understanding” of the technology, but stressed that DLTs are not a “silver bullet” solution to all existing problems in the financial arena, “The SWIFT and Accenture paper provides the industry with a blueprint for reaching the next step in identifying how to apply DLTs.”  he adds.


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