If a bank or financial institution already has Swift rails, they are likely to continue to leverage this TradFi institution – usually owned and run by the banks as a collective – to underpin their tokenized finance initiatives.” Swift and a group of more than 30 financial institutions globally will develop a shared digital ledger, with the initial focus on real-time 24/7 cross-border payments. Specifically, Swift will work with Consensys (founded by Cofounder of Ethereum) on a conceptual prototype of the ledger, which will leverage Swift’s unmatched resiliency, security and scalability to facilitate transactions using any form of regulated tokenized value. The initiative will see Swift partner up with Bank of America, Citigroup, NatWest and others to develop a shared digital ledger for tokenized assets, including stablecoins. It will combine straight-through processing and value+messaging capabilities on a single platform that is used by every major bank. The conversation starts with Musheer and Monica explaining why they believe the lines between TradFi and DeFi don’t mean as much anymore. They also talk about the stablecoin implications of Swift building its own blockchain to enable transactions between banks worldwide, with HKU’s Regulatory Ramblings host Ajay Shamdasani. Critics have dismissed correspondent banking as slow and outdated while praising stablecoins as faster and superior. But that narrative shifts the moment Swift brings blockchain into its rails – improvement. Separately, building on earlier pilots, Swift also will add capability to support interoperability across existing and emerging systems for various use cases. “Developments are part of Swift’s strategy to power a best-in-class experience through innovation on parallel tracks – upgrading existing rails while creating future digital rails to maximize infrastructure choice for the industry.” Monica and Musheer then share their thoughts on whether this can unlock interoperable tokenized bank deposits alongside other tokenized assets on SWIFT’s ledger. It is an open question as to whether the impact on global payments will be transformational or just a modification. We then turn to Konrad to discuss his recently written paper. It is currently under review at Law and Geoeconomics, and is closely related to the work done by HKU Law’s very own – and Regulatory Ramblings’ team leader – Prof. Douglas Arner – on the regionalization of payment systems. Konrad’s paper discusses the extraterritorial frictions arising when policymakers seek to reconcile the payment systems of different countries. The main areas of friction are settlement finality, data protection, AML and governance. In the paper, he proposes several institutional reforms aimed at reducing those frictions, namely – a model law on cross-border payment finality, narrowly tailored safe harbors for data sharing and an international payments forum under the auspices of august global bodies such as the Bank of International Settlements or the Financial Stability Board, though, as Ajay asks him: “Given that the BIS and FSB are legacy organizations that are slow to change, is that likely or prudent?” The abstract to Konrad’s paper reads: “In 2020, the G20 placed cross-border payments at the top of the global financial agenda, spurring experiments to make transfers faster, cheaper, and more inclusive. Many build on instant or fast payment systems (FPS), yet linking infrastructures is as much a legal and geopolitical challenge as a technological one. When systems interconnect, they project domestic law across borders, generating extraterritorial frictions and giving rise to sovereignty concerns. This article compares three models of FPS interlinking—bilateral links, multilateral hubs, and direct access arrangements—showing how each produces frictions around settlement finality, AML/CFT and sanctions compliance, data protection, and governance. It then considers various policy proposal aimed at reducing these frictions, such as prefunding of accounts and the use of privacy-enhancing technologies. The analysis shows that technical fixes cannot resolve the structural frictions of cross-border payments, supporting the view that payment infrastructures embody sovereignty and that integration will likely proceed through regional blocs rather than a single global framework.” He shares with Ajay why he chose to write his article now and what he thinks it adds to the existing literature on payments. Konrad elaborates on the three interlinking models of FPS — bilateral links, multilateral hubs, and direct access arrangements — delineated in his piece and discusses how each produces frictions around settlement finality, AML/CFT and sanctions compliance, data protection, and governance. Konrad acknowledges there are drawback to multilateral model and that harmonization of law is often impeded because everyone must agree to the rules, which comes up against sometimes rigid notions of sovereignty and regulatory ‘turf wars’ for some counties. He concludes by saying that regional payment blocks will likely be what the future holds – and how these different blocks will interact with each other will be key as improvements in regional payment infrastructures continue. “Regional payment blocks seem to be a way to circumvent sanctions, which are geopolitical weapons,” Konrad says. “That is why regional blocks will emerge, [because] people will disagree on what will be sanctioned. Ultimately, it is a political question, not a technical fix.”