SWIFT Unveils Results of Second Phase of CBDC Solution Test

Publish on 26 March 2024

SWIFT, the global bank messaging system, has revealed the outcomes of the second phase of its central bank digital currency (CBDC) interlinking solution test, following a successful six-month trial period.

Instead of creating its own CBDC, SWIFT developed the SWIFT connector, a solution to interlink existing CBDCs. The findings of the second phase demonstrate that the SWIFT connector enables financial institutions to conduct various financial transactions seamlessly using CBDCs and digital tokens, integrating them into their business operations. SWIFT also hinted at the possibility of expanding its platform beyond CBDCs to include bank-led tokenized deposit networks in future versions.

The test involved one of the largest collaborations on CBDCs, with 38 institutions, including central banks, commercial banks, and market infrastructures, participating. Over 125 sandbox users conducted more than 750 transactions, and 60 representatives from participating financial institutions engaged in over 20 collaborative working group meetings to discuss various use cases.

SWIFT plans to develop a production roadmap for its SWIFT connector, contingent on market development and readiness. This new service could meet the increasing interest in CBDCs worldwide, as several countries, including China, Jamaica, The Bahamas, Nigeria, and others, have active CBDCs or ongoing CBDC projects. Additionally, approximately 130 countries are exploring CBDCs, including Spain, the Philippines, and Europe.

In the second phase, SWIFT's sandbox testing explored more complex use cases, such as connecting and orchestrating transactions across simulated digital trade and tokenized asset and foreign exchange (FX) networks. The experiments demonstrated interoperability between digital networks and trade platforms, facilitating atomic trade payments and reducing delays in global trade. Moreover, the SWIFT connector showcased its ability to interlink multiple asset and cash networks, enabling atomic delivery across platforms and facilitating FX netting and settlements via CBDCs.

Tom Zschach, Chief Innovation Officer at SWIFT, emphasized the importance of interoperability between networks and enabling new technologies to scale and reach their full potential. He highlighted SWIFT's role as a community and convener in facilitating innovation experiments and addressing industry challenges.

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