Citi and Swift have completed a joint trial that is being interpreted as a significant move toward modernizing global settlement infrastructure. The experiment demonstrated that digital and fiat currencies could settle against each other in a Payment-versus-Payment configuration while operating within the existing banking framework. The outcome suggests that it may be possible to upgrade the financial system without rewriting its foundational structure.
Tom Zschach, who played a key role in the trial, indicated that the true breakthrough lies not in issuing new forms of currency but in the settlement model being tested. He pointed out that a major bank and a financial network were able to experiment under current regulatory and operational parameters, showing that modernization can unfold without a complete overhaul of the monetary system.
The trial combined Swift’s established global messaging network with blockchain-based functionality, effectively bridging traditional banking rails with distributed ledger technology. This setup enabled both sides of the transaction to move simultaneously, reducing time delays and the operational risk often linked to cross-border settlement.
The initiative aimed to prove that settlement can improve in speed and risk management while remaining integrated within existing financial structures. Ayesa Latif, who leads FX products at Citi, suggested that the exercise helped clarify the infrastructure requirements for digital currencies as banks begin transitioning from theoretical frameworks to live operational models. The test introduced a hybrid method, embedding blockchain into legacy systems rather than replacing them.
Jonathan Ehrenfeld, head of strategy at Swift, signaled that Swift is well-positioned to serve as the secure connector between tokenized assets and traditional finance. He noted that the trial reinforced Swift’s ability to orchestrate tokenized value exchange across its global network, a capability that is becoming particularly relevant as tokenization accelerates across asset classes.
Current market trends support the timing of these findings. Citi GPS forecasts that the stablecoin sector could expand to nearly $1.9 trillion by 2030, driven by increased regulatory clarity and more diverse use cases. Monthly stablecoin transaction volumes are nearing $1 trillion, highlighting the pace at which digital asset networks are evolving.
Yet, challenges remain. While blockchain systems provide speed and transparency, the conversion process between traditional bank accounts and blockchain wallets still presents friction due to structural differences. The Citi-Swift initiative targets this gap by testing a messaging layer that can operate across both environments.
As part of the trial, Citi and Swift designed a messaging standard capable of tracking the full lifecycle of a transaction, from initiation to settlement confirmation. The model also identified specific data requirements for transactions involving fiat currency and digital assets. To address the irreversible nature of blockchain transactions, the test incorporated escrow mechanisms that ensured both parties remained aligned until final settlement. A coordinating component synchronized each action, ensuring payment legs cleared at the same time.
The test made use of USDC tokens on the Sepolia Ethereum testnet, aiming to replicate near-real settlement conditions while maintaining a controlled environment. Both Citi and Swift have indicated that they plan to continue refining the model in collaboration with industry stakeholders as they work toward scalable digital asset settlement standards.
The trial illustrates that the financial sector is increasingly focused on interoperable systems capable of unifying digital and traditional value flows. Rather than replacing old infrastructure, the emerging approach appears to center on upgrading it, one coordinated settlement layer at a time.
