For decades, talking about international relocation has been synonymous with talking about Swift (the world’s interbank communications association). And that’s because interbank networks were the indisputable backbone of the global financial system, a seemingly immovable giant.
But a new era of financial technology led by solutions such as Ripple touches its doors and threatens to redraw the financial power map. Now the discussion is focusing on how quickly it brings to a growing cryptocurrency-based system?
To understand the threats Ripple represents, you must first understand the fundamental inefficiencies of your current system. To ensure payments can be settled, as explained by Sal Gilbert, a financial and ETF analyst at Teucrium companies, Banks to keep capital “freezing” in accounts around the world.
These accounts are known as Nostro/Vostro. This allows banks to always carry out transactions in foreign currency without converting local currency.
“If you want to send Miami money to Tokyo, the banks need to have money in Tokyo and Miami,” says Gilbert. This means that if a Miami bank wants to send $10,000 to its customers in Tokyo, it must have the funds in Yen’s Nostro account, a Japanese bank. Therefore, US banks transfer funds through Swift, which is a process that can take several days and requires adequate balance in Japanese nostril accounts.
According to Gilbert, the ability to unlock values is A true catalyst that can boost banks and migrate transaction flows. He added that it is money that cannot be provided, invested or used to generate growth. And this is where ripple breaks with a fundamentally different solution.
It means that Using the digital asset XRP as a neutral “bridge” allows financial institutions to move their value Instantly and directly without needing an overseas account.
However, it should be noted that this is also possible to do so via other cryptoactives such as Bitcoin (BTC). In fact, this week we announced the SOFI Technologies Bank, which the asset uses to promote US dollar remittances to Mexico.
End of Swift’s domain?
Gilbert foresees that in the future, bank reports could include two columns, “both Swift and blockchain.”
“The percentage of Swift will decrease, but the blockchain will increase,” Gilbert distinguishes that this is a major problem for huge traditional banking networks.
For years, Ripple Labs has committed to revolutionizing the banking system with its technology and XRP cryptocurrency, and to place it as an alternative. Despite connecting over 11,000 engines, Swift system is known for being slow and expensive In 200 countries. However, rumors of a possible alliance between Ripple and Swift, which have been recently fueled, lack official confirmation.
Ripple joined Swift’s interoperability pilot in 2023, but there is no concrete evidence of integration, focusing on Stablecoin RLUSD and legal disputes resolution rather than integrating alliances with Swift.
Confusion and adaptation: The battle between Ripple and Swift
However, in the face of existential threats, Swift does not remain in crossed arms. In the strategic movement, the organization has announced an update to the Global Message Standard ISO 20022, which will take effect in November 2025, as reported by encryption.
That update is essentially the perception that the future is multi-active and that ignoring cryptocurrency is no longer an option.
The new version of Swift introduces three basic changes:
- Recognizes cryptocurrency wallets via a new format (BCAW) that includes the direction of the digital wallet as the origin or destination of the transaction.
- Integrate price oracle as a standardized data source to validate the value of digital assets within a transaction.
- You can define a network commission and explicitly specify the rate (network fee), which is the operating costs specific to digital assets that the current system is not considering.
After all, these two strategies reveal the true nature of a fast, ripple-through battle, one of the native confusion and another.
Sal Gilbert does not express it, but his analysis of the efficiency of releasing Ripple’s capital, in contrast to Swift’s decision to integrate features with Cryptoactive, He suggests that the latter adds only a layer of modernity to the inherited infrastructure..
Ripple, on the other hand, does not require adaptation. Because its technology and XRP are specifically designed for cross-border transactions.