CBDC | March 28, 2024

Image: Connecting Digital Islands: Swift CBDC Sandbox Phase 2 Results

SWIFT’s CBDC Solution to Transform Cross-Border Transactions

In a recent release, SWIFT has announced plans to launch a new platform within the next 12 to 24 months that aims to integrate CBDCs with the existing financial system to potentially streamline and secure digital currency transactions across borders.

• Under the guidance of Nick Kerigan, SWIFT’s head of innovation, the platform’s development involved a six-month trial with a 38-member group comprising central banks, commercial banks, and settlement platforms. This collaboration marks one of the largest global efforts on CBDCs and “tokenised” assets to date.
• A key objective of the trial was to ensure interoperability among different countries’ CBDCs, even those built on diverse underlying technologies. This approach aims to mitigate the risk of payment system fragmentation and enhance the efficiency of complex trade and foreign exchange payments.

See:  Swift’s Blockchain Breakthrough Boosts Global Tokenization

• The trials demonstrated that financial institutions could leverage their existing infrastructure to engage with CBDCs, signaling a seamless transition towards digital currency adoption without the need for extensive system overhauls.
• With the trials deemed a success by participants, SWIFT has outlined a roadmap to transition the initiative from experimental to operational stages, aiming for product launch within the next 12 to 24 months. This timeline aligns with the anticipated rollout of major economy CBDCs, positioning SWIFT to maintain its dominance in the bank-to-bank communication network.
• View the Connecting Digital Islands:  Swift CBDC Sandbox Phase 2 Results

Tom Zschach, Chief Innovation Officer at Swift:

“Swift is a community – a convener of and for our industry – and I’m delighted that we’ve been able to facilitate these critical innovation experiments and show that institutions can continue to use much of their existing infrastructure alongside new, innovative technologies. Fragmentation is a challenge for the entire industry, and ensuring interoperability between networks is vital to addressing this while also enabling new technologies to scale and reach their full potential.”

Outlook

By fostering interoperability among a diverse range of digital currencies and leveraging its extensive global network, SWIFT is poised to facilitate a more interconnected and fluid financial ecosystem.

See:  Federal Reserve on U.S. CBDC and Global Comparison

As the world’s central banks continue to advance their digital currency initiatives, SWIFT’s innovative platform could play a crucial role in shaping the future of global finance.  How will Swift’s CBDC global payment platform compete with BRICs recently announced CBDC initiative?

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• Source: https://ncfacanada.org/swift-launching-cbdc-solution-within-2-years-to-compete-with-brics/