By Alun John

LONDON (Reuters) – Global bank messaging network SWIFT will trial live transactions of tokenised assets and digital currencies next year, it announced on Thursday. This marks a significant step in the gradual integration of such assets into the broader financial system.

Banks and asset managers have been exploring the concept of tokenising traditional assets like bonds for several years. The goal is to use digital units—typically blockchain-based tokens representing a share of the underlying asset—to make trading quicker, cheaper, and more efficient, potentially cutting out intermediaries involved in many transactions.

So far, however, these tokenised assets have not gained significant traction in the wider market.

Approximately 90% of the world’s central banks are also experimenting with central bank digital currencies (CBDCs), which are digital versions of fiat money designed to facilitate the trading of tokenised assets. Monetary authorities are working to keep pace with technological advancements that have made cryptocurrencies like bitcoin possible.

SWIFT, a critical player in the global banking system, has been testing both CBDCs and tokenised assets. In March, it announced plans to launch a new platform to connect developing CBDCs with the existing financial system.

“Now we see industry demand to move out of that (trial) phase and see a digital asset really move, and have a counterparty pay them in real money against that,” said Nick Kerigan, SWIFT’s head of innovation. “That’s the stage that we are moving to next year, albeit in a controlled way.”

Despite the large potential, the fragmented nature of the market is a barrier, with very few initiatives advancing beyond banks’ internal systems. Central banks are also testing wholesale CBDCs for cross-border payments but only within small groups.

The latest SWIFT initiative involves integrating different types of digital assets across various platforms.

“To successfully trade and settle a tokenised bond transaction, you need the cash, and that’s where a tokenised deposit or wholesale CBDC comes in,” said Kerigan. “It’s not good enough if you just have delivery or just payment; you need both.”