SWIFT has published a paper - Distributed Ledgers, Smart Contracts, Business Standards and ISO 20022 - that investigates the application of business standards to distributed ledger technology (DLT) and smart contracts (SC).

The organisation underlines that, while blockchain technology and smart contracts are promising to completely change the way we automate business processes in financial services, standards will be needed to establish agreed formats. It states: “However, if DLT/SC technology is to address complex problems, the industry will also need to find agreement on the meaning and format of data deployed on DLT platforms, formalised business processes and clarity around the legal implications of both for participants, that is to say, business standards.”

The purpose of standards for DLT and smart contracts will be, firstly, to specify a methodology to capture and publish formal business specifications in a consistent and precise way and, secondly, to provide governance processes that can be used to standardise the content and evolution of the business specifications themselves.

One of the reasons why establishing DLT standards is so important is that business processes will require DLT to interact with existing automation mechanisms, including messaging and APIs, and with other distributed ledgers (SWIFT says that there is already a proliferation of distributed ledgers and more are being announced).

Reuse not reinvent

SWIFT believes that it's important to explore principles of re-use and interoperability between the new or adapted standards that will be deployed in DLT environments and existing messaging and data standards. The paper looks at both the necessary preconditions for standardisation of DLT/SC, as well as the possibility of repurposing some of today’s existing standards. In particular, it asks:

• What would be the characteristics of standards in the DLT/SC world?
• What can be learned from previous industry standardisation initiatives?
• What can be reused today from existing standards?
• What are the benefits of reusing existing standards?

Full-scale standardisation of DLT/SC use cases 'premature'

Stephen Lindsay, SWIFT's head of standards, said: “The paper recognises that full-scale standardisation of DLT/SC use cases is premature; however, SWIFT stands ready to work with the community to conduct further studies into the reuse of existing business standards in order to better facilitate the efficient workings of DLT/SC technologies for the financial industry as a whole.”