ISO 20022 is a global standard for the transmission of financial data. Its main goal is to unify and standardize messages and processes within the financial system, enabling more efficient, transparent, and secure communication between financial institutions, banks, and other entities involved in securities exchange or international payments.
Introduced in 2004, ISO 20022 has gained traction due to its ability to adapt to new technologies and its flexibility to handle different types of transactions.
Importance in the Future Global Finance
In an increasingly globalized world, the volume of cross-border payments and financial transactions continues to grow. ISO 20022 enables interoperability between different financial systems, reducing the risk of payment errors and improving operational efficiency.
Moreover, the adoption of this standard facilitates the automation of financial processes and enhances the ability to monitor risk and regulatory compliance, which is crucial in an environment where security and transparency are ever more important.
One of the key aspects of ISO 20022 is its ability to handle richer and more detailed data compared to previous standards like SWIFT. This means that banks and other financial institutions can better analyze and manage transactions, allowing for a clearer and more precise flow of information, which is essential for innovation in areas such as instant payments.
Ripple/Stellar and their relationship with ISO 20022
Both Ripple and Stellar Lumens, two of the leading blockchain networks focused on facilitating global payments, have adopted the ISO 20022 standard.
Ripple, with its cross-border payments platform, uses ISO 20022 to efficiently integrate with traditional financial systems. This allows them to offer faster and cheaper international transfers while adhering to global security and regulatory standards.
Stellar, on the other hand, also adopts ISO 20022 to enable interoperability within its network, focused on international payments and remittance solutions. Thanks to this standard, Stellar can more easily collaborate with traditional financial institutions, bridging the gap between cryptocurrencies and fiat currencies.
The standard will be fully operational by November 2025, but it will be 365 days later, in November 2026, when the entire global financial system will have adopted ISO 20022 in its daily operations.