SWIFT, in partnership with French IT company, Capgemini, is conducting new experiments to test how it can interlink domestic cross-border central bank digital currency (CBDC) payments and take the next step toward seamless cross-border payments involving digital currencies. The company made the announcement in a press release, noting that “nine out of 10 central banks are now exploring CBDCs – covering economies that account for more than 90% of global GDP.”
The Society for Worldwide Interbank Financial Telecommunication, or SWIFT, is a Belgian financial messaging service used by banks for international money transfers. Together with Capgemini, it will develop a proof of concept to link a variety of CBDC networks along with other traditional currency networks. “Globally, most central banks are creating CBDCs, ‘with a number of banks using different technologies, standards, and protocols’ for their digital currencies,” SWIFT’s chief innovation officer Thomas Zschach said.
This is the second research initiative that SWIFT has conducted on CBDC. The company’s statement indicates that it is building a gateway for domestic CBDC networks to intercept cross-border transactions, translate them, and forward them to the SWIFT platform for onward transmission. This system will make use of the already established SWIFT standards, authentication mechanisms, and infrastructure. SWIFT links more than 11,000 financial institutions in more than 200 countries.
With its new partnership with Capgemini, SWIFT is building on the work it began (in 2021) with Accenture, an American professional services company. This partnership was successful in establishing a cross-border transaction between a CBDC network and “an established real-time gross settlement (RTGS) system.”
“If the experiments are successful, it will demonstrate that SWIFT has the capability and technical components to interlink different networks,” Nick Kerigan, chief of innovation at SWIFT, expressed. “This would help solve a huge technology and industry challenge facing CBDCs. And it could enable us to help central banks make their own CBDC networks cross-border payment ready.”
Last year, SWIFT processed 42 million messages each day, but network transactions can take several days to complete. It’s working hard to be relevant in the global economic system, particularly in relation to CBDCs. There is a widespread expectation among developers that CBDCs interacting outside the traditional network, potentially with the aid of Ripple’s (XRP).
Interest in Central Bank Digital Currencies (CBDCs) is clearly on the rise. A new report from the Bank for International Settlements says that nine out of 10 central banks are now exploring CBDCs – covering economies that account for more than 90% of global GDP.
An increasing number of these central banks are in the advanced stages of their CBDC exploration, with nine countries already live with their own digital currency – most notably Nigeria and The Bahamas.
