The End for SWIFT Payment System?

 

In a major move to explore the use of digital currency in Singapore, the city state’s central bank plans to launch a pilot project with the country’s stock exchange and eight local and foreign banks to use blockchain technology for interbank payments.

  • Cross-border foreign currency transactions will also be reviewed under the pilot as Singapore’s central bank looks to position the financial center as an important Fintech hub.
  • The effort is supported by the R3 blockchain research lab and BCS Information Systems, Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), said at the Singapore Fintech Festival
  • “Under the pilot system banks will deposit cash as collateral with the MAS in exchange for MAS-issued digital currency,” Menon said on Wednesday.

(SINGAPORE) The consortium includes Bank of America Merrill Lynch, The Bank of Tokyo-Mitsubishi UFJ, Ltd, Credit Suisse, DBS Bank Ltd, The Hongkong and Shanghai Banking Corp Ltd, JP Morgan, OCBC Bank, Singapore Exchange and United Overseas Bank.

Blockchain, which originates from digital currency bitcoin, works as an electronic transaction-processing and record-keeping system that allows all parties to track information through a secure network, with no need for third-party verification.

“The next phase of the project will involve transactions in foreign currency, possibly with the support of another central bank,” Menon told an audience of bankers and executives from technology companies.

Policymakers in Singapore have sought to attract investment in Fintech, easing regulation and setting up special departments to support the industry.

The MAS on Wednesday also finalised guidelines for a “regulatory sandbox”, which allows financial institutions and finTech players to test their new business models and products without falling foul of financial rules.

Menon also said Singapore is in the process of creating a national know-your-customer or KYC utility through a personal data platform that will have government-verified personal details of residents.

The MAS will partner with the government agencies to expand the platform known as “MyInfo service” to the financial industry for more efficient KYC checks.

Singapore has stepped up scrutiny of its banking industry following a money laundering probe linked to Malaysian state fund 1Malaysia Development Berhad (1MDB), which cast a spotlight on one of the world’s leading wealth management centres.

Reuters News, TRUNEWS Commentary

Source:

http://www.trunews.com/article/the-beginning-of-the-end-for-swift-payment-system


Deutsche Bank Seeking Alternatives, Reforms to SWIFT

Deutsche Bank is calling for a reform of SWIFT, the global financial messaging system which has faced criticism since February’s $81 million heist at Bangladesh Bank.

  • Germany’s flagship lender – which the International Monetary Fund has branded as the world’s systemically most risky bank for its numerous links to other lenders – is one of the biggest users of SWIFT. It is one of the first large banks to publicly urge changes.
  • SWIFT is only as strong as its weakest member, Deutsche Bank’s Chief Information Security Officer Hinrich Voelcker said on Wednesday, adding the bank was in discussions with SWIFT about the consequences of the Bangladesh heist.
  • “If trust in this system breaks down we all have a problem,” he said, without saying which specific reforms he believes are needed.
  • SWIFT is a member-owned cooperative, dominated by large Western banks, including lenders such as Citi , JP Morgan and BNP Paribas , which built the network decades ago.
  • It now connects more than 10,000 different financial firms and industry experts have said all of its users should have to meet a minimum security standard to continue accessing it.

 

SWIFT ONLY AS STRONG AS IT’S WEAKEST LINK

Since the 1990s, many smaller banks in emerging markets have joined SWIFT, which stands for Society of Worldwide Interbank Financial Telecommunication.

Current and former board members of SWIFT have told Reuters that for years the organization suspected there were weaknesses in the way smaller banks used its messaging terminals.

In the Bangladesh heist, hackers broke into a computer interface called Alliance Access, a piece of software sold by SWIFT for accessing its central network. It is still unclear exactly how the thieves gained entry.

Bank Bangladesh, the country’s central bank, has alleged a botched upgrade of its system left vulnerabilities in it. SWIFT has rejected any responsibility for the way Bangladesh Bank upgraded its systems.

Since the Bangladesh incident many banks have added security features, Deutsche Bank’s Voelcker said, adding rapid alert systems helped banks exchange information on hack attempts and patterns.

Contributed by Andreas Kröner; Writing by Arno Schuetze; Editing by Mark Potter – REUTERS

Source:

http://www.trunews.com/article/deutsche-bank-seeking-alternatives-reforms-to-swift#sthash.7oNSNWmJ.dpuf

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s