SWIFT Works on Technical Solution for CBDC Cross-Border Payments

The first phase of interoperability testing of various CBDC projects under SWIFT’s initiative was successfully completed. The team is preparing to begin the next phase of central bank digital currencies testing, which will create a “CBDC connector.”

SWIFT Works on Technical Solution for CBDC Cross-Border Payments

The international interbank system SWIFT announced the completion of the first phase of interoperability testing of various CBDCs for cross-border payments. The project team is ready to proceed to the next stage.

The SWIFT CBDC Sandbox Project simulated about 5,000 transactions between different blockchain networks and fiat payment systems. CBDC tests were conducted on technologies from more than 18 major financial institutions. Participants in the project included:

  • Royal Bank of Canada (RBC);
  • the Banque de France (BdF);
  • French financial conglomerate Société Générale;
  • BNP Paribas;
  • the Monetary Authority of Singapore (MAS);
  • the Hongkong and Shanghai Banking Corporation (HSBC);
  • the Deutsche Bundesbank (DB);
  • Britain’s large National Westminster Bank (NatWest).

The main goal of the SWIFT project is the interoperability of CBDCs of different countries with the system of fiat transfers. The sandbox was created to eliminate the possibility of future fragmentation through the use of domestic CBDCs for cross-border transfers. 

About 90% of the world’s central banks study the possibility of creating CBDCs. However, most projects focus primarily on the internal use of digital currencies. SWIFT is trying to solve the issue of interoperability of such “digital islands.”

The next phase of this pilot project involves the development and testing of a beta version of the “connector,” a technical solution for cross-border payments in CBDCs. The focus will be on “use cases” for government digital currencies, including the ability to exchange securities, conditional payments, and trade finance.

According to Tom Zschach, Chief Innovation Officer at SWIFT, tests conducted showed the “critical role” of the protocol as part of creating a “CBDC connector.” He said participants of the pilot project saw “clear potential and value” of such tests and were ready for further cooperation.

SWIFT experiments with CBDCs began back in 2022 when the protocol of interbank payments announced the cooperation with Capgemini. In November last year, the SWIFT team reported the first successes in the experiments to integrate CBDC into the existing financial infrastructure.

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