Swift, the global member-owned cooperative and the leading provider of secure financial messaging services, has announced further progress on its experimental solution for interlinking Central Bank Digital Currencies (CBDCs).
Swift has reported that 18 central and commercial banks have found “clear potential and value” in the API-based CBDC connector after a comprehensive review. The 12-week period of collaborative sandbox testing, in which almost 5,000 transactions were simulated between two different blockchain networks and with existing fiat-based payment systems, showed that the solution enabled seamless exchange of CBDCs, even those built on different platforms.
Swift’s innovation enables CBDCs to move seamlessly on existing financial infrastructure and efficiently scale for international transactions across more than 200 countries.
Interoperability is a key strategic focus for Swift, and a key challenge for the financial industry as digital currencies develop. According to the Atlantic Council, more than 110 countries are currently exploring CBDCs, with almost a quarter expecting to launch within the next one or two years. However, most are focusing primarily on domestic usage, which could lead to a fragmented landscape consisting of ‘digital islands’.
Tom Zschach, Chief Innovation Officer at Swift, said that the experiments showed the critical role that Swift could play in a financial ecosystem in which digital and traditional currencies co-exist. Swift will develop a beta version of the solution for payments that can be tested further by central banks. A second phase of sandbox testing will also be held, in which the Swift community can collaborate further with a focus on new use cases, including in securities settlement (such as cross-asset exchange), trade finance, and conditional payments.
The 18 central and commercial banks participating in the sandbox testing included the Banque de France, the Deutsche Bundesbank, the Monetary Authority of Singapore, BNP Paribas, HSBC, Intesa Sanpaolo, NatWest, Royal Bank of Canada, SMBC, Société Générale, Standard Chartered and UBS. These participants have expressed strong support for the solution’s continued development and have made clear their desire for continued collaboration on interoperability.
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