SWIFT, the prominent global messaging network that facilitates interbank transfers, is actively exploring enhancements to its services by trialing Ripple’s XRP Ledger and Hedera Hashgraph. This initiative aims to streamline cross-border payments, making them faster and cheaper, particularly in light of the forthcoming ISO 20022 standard that will be mandatory for financial institutions starting in November 2025.
Historically, SWIFT has been the backbone of international transactions, yet its processes have faced significant criticism due to their slow and costly nature. Transfers can take up to five days and come with hefty fees ranging from £20 to £40. Moreover, the system lacks transparency, leaving customers unaware of when their money will arrive, and the amount received often diminishes due to deductions by intermediary banks.
SWIFT’s current method, relying on multiple banks, adds layers of complexity that can lead to delays, additional fees, and potential errors along the way. To address these concerns, SWIFT began testing blockchain technology as part of its modernization efforts. The trials involving Ripple’s XRP Ledger and Hedera Hashgraph underscore the organization’s commitment to finding a more efficient alternative to traditional banking systems.
XRP, which has been designed as a bridge currency for seamless international payments, boasts advantages such as near-instant settlement and minimal fees. Unlike Bitcoin and Ethereum, which were developed for different primary purposes, XRP’s design focuses specifically on enhancing payment systems. Should SWIFT successfully integrate its infrastructure with Ripple’s Ledger, XRP could emerge as a pivotal asset in global financial transfers. This would enable banks and payment providers to utilize XRP for currency conversions, thereby bypassing the need for correspondent banks that currently handle such exchanges.
For Ripple, securing a partnership with SWIFT would represent a significant milestone after years of efforts to establish XRP as a vital cryptocurrency. The company has already formed alliances with various financial institutions, such as Japan’s SBI, which introduced a stablecoin backed by Ripple. Analysts predict that if a mere 1% of SWIFT’s approximate $150 trillion in annual transactions were to utilize XRP, it could generate a staggering $1.5 trillion in demand for the digital asset. This would signify a dramatic shift in both the scale and the perception of XRP, which currently sees daily trading volumes much lower than that potential figure.
Ripple’s CEO, Brad Garlinghouse, has expressed optimism about the future of XRP, suggesting that it could capture up to 14% of SWIFT’s global liquidity by 2030. He emphasized the importance of liquidity, asserting that if XRP could effectively drive this liquidity, it would be beneficial for the asset’s standing and utility in the market.
Despite these positive projections, the adoption of XRP remains limited to a small number of financial institutions, highlighting the considerable challenges that lie ahead in scaling its use on a global basis. The outcome of SWIFT’s trials with XRP and Hedera Hashgraph will be closely watched, as it could reshape the landscape of international payments forever.
