Monday, September 25, 2023

SWIFT unveils CBDC pilots at three central banks


  • Three central banks are testing CBDC pilots, with SWIFT focusing on interoperability.
  • SWIFT’s “Connector” technology has facilitated transactions between different CBDC systems.
  • SWIFT began working on CBDCs more than 18 months ago and had 5,000 simulated transactions in the initial phase.

In a revealing update, the Society for Worldwide Interbank Financial Telecommunications (SWIFT) announced that three central banks have done so launched pilot projects for central bank digital currencies (CBDCs).

This new phase of work on CBDC interoperability highlights the active participation of 30 financial institutions that want to further explore their applications.

Project details and participants

The Hong Kong Monetary Authority (HKMA) and the National Bank of Kazakhstan have taken the step to integrate this new direct testing solution into their existing infrastructure. However, SWIFT left the identity of the third central bank involved in this announcement in the dark.

Tom Zschach, Chief Innovation Officer, said:

“Our focus is on interoperability – to ensure that new digital currencies can coexist seamlessly with each other and with current fiat-based currencies and payment systems.” The financial world has already recognized the great potential of our CBDC innovations to prevent and at the same time unify digital islands to ensure secure transition between current and future payment systems. “This next phase of testing and exploration will help us further refine the solution to ensure its maximum effectiveness and scalability.”.

The challenge of fragmentation

In addition, the company points out that given the Creating various CBDCs in almost 130 countries, Fragmentation issues are likely to arise as these technologies come to fruition. Therefore, the organization has prioritized interoperability solutions to address this looming issue.

On the other hand, it was reported that the new technology “Interconnects” of SWIFT has enabled seamless transactions between different blockchain-based CBDC systems based on completely different frameworks.

“To address this fragmentation, SWIFT has prioritized interoperability for digital currencies and tokenized assets in its innovation agenda to enable their scalability as they integrate into the financial ecosystem. SWIFT’s specific work on CBDCs began more than 18 months ago. The first phase of their experiments simulated nearly 5,000 transactions between two different blockchain networks and fiat-based payment systems. Participants from central banks and commercial banks emphasized that the connector enables the seamless exchange of CBDCs, even if they are based on different platforms.”

Nation World News Desk
Nation World News Desk
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