The continuous increase in the use of cryptocurrency and blockchain technology has largely been adversarial to the currently used traditional methods of payment and financial solutions in general.
Most of these systems are now tightening their belts, trying to improve on their performance because the cryptocurrency wave could be detrimental to them. Some crypto proponents like BitMex CEO, Arthur Hayes, has forecasted doom for traditional payment systems because they can’t match the efficacy of crypto. Now, SWIFT seems to be on its toes as it may have realized that there is a serious competition ahead.
Recently, Facebook announced its own cryptocurrency called the Libra and released a whitepaper as well. Since the announcement, the financial markets – both digital and traditional – are still reacting and there has been considerable backlash from the government.
However, one significant but largely indirect response came from SWIFT when it put out a press release just two days after Facebook’s announcement. The multinational firm described quite an interesting goal.
“SWIFT’s aim is simple: to make cross-border payments real-time, 24/7 and as seamless, convenient, cost-efficient and accessible as domestic payments.”
This seems like a hurried response to another major player in the game, potentially taking their space. Apart from the fact that a firm like Facebook is a big enough competition for anyone, the fact that such a firm is competing using cryptocurrency just might be enough to scare any other firms.
We can fully assume that the chance of SWIFT playing a part in the cryptosphere is very unlikely. SWIFT is definitely less than excited about the explosion of these digital assets and doesn’t think it solves any problems.
“Importantly, we don’t think that cross-border payments challenges should be solved for with closed loop systems…Loops create barriers and friction; they reduce fungibility and portability, they limit competition and they fragment liquidity.”
For SWIFT, the problem would be that all the tokens springing up would still compete with each other and would only truly aid its own closed-loop or community. For there to be any real progress, some level of correlation between all the different platforms would be required.
SWIFT has already made a prediction with its Global Payments Initiative (GPI), projecting that it will be the standard for cross-border transactions by 2020. Is this realistic considering the propagation of new technology like crypto or is this a forced response coming from a player who is afraid of being beaten down?