SWIFT Announces Findings Of Second Phase Of CBDC Solution Test

Global bank messaging system SWIFT has announced the findings of the second test phase of its CBDC solution after a successful six-month test period. 

SWIFT did not create its own central bank digital currency (CBDC); instead, it developed the SWIFT connector, an interlinking solution for existing CBDCs. 

SWIFT Announces Second Phase Findings 

SWIFT has announced the findings of the second phase of its industry-wide sandbox testing on its central bank digital currency interlinking solution. Results have shown that the SWIFT connector can allow financial institutions to conduct various financial transactions using CBDCs and digital tokens, seamlessly integrating them into their business practices. SWIFT noted that future versions of its platform could be expanded beyond CBDCs, such as bank-led tokenized deposit networks. 

“At the core of our solution is the DLT and smart contract layer, which maintains consistent records of transactions.”

Largest Collaborations On CBDCs 

SWIFT stated that the test was one of the largest collaborations on CBDCs, and 38 institutions, including central banks, commercial banks, and market infrastructures, participated in the experiments. Regarding network activity, over 125 sandbox users conducted over 750 transactions, and 60 representatives from participating financial institutions took part in over 20 collaborative working group meetings to discuss use cases. 

SWIFT is also planning to develop a production roadmap for its SWIFt connector. However, it noted that all progress will be based on market development and readiness. SWIFT’s new service could meet a growing interest in CBDCs across the globe. Several countries have active CBDCs or active CBDC projects. This includes China, Jamaica, The Bahamas, Nigeria, and others. At least 130 countries are exploring CBDCs, including Spain, the Philippines, and Europe. 

The Results Of The Second Phase 

The second phase of SWIFT’s sandbox testing explored more complex use cases, such as using its solution to connect and orchestrate transactions across simulated digital trade and tokenized asset and FX networks. The experiments in digital trade demonstrated interoperability between digital networks and trade platforms, with SWIFT’s solution facilitating atomic trade payments. Smart contracts and event-driven programming allowed payment automation once certain conditions had been met, with participants also highlighting the potential of reducing delays in global trade. 

The experiments also showed that SWIFT’s solution could interlink multiple asset and cash networks, facilitating atomic delivery across these platforms. The experiments also showed that the SWIFT connector could play a crucial role in foreign exchange, be interoperable with existing market infrastructure, and facilitate FX netting and settlements via CBDCs. Speaking about the results, Tom Zschach, the Chief Innovation Officer at SWIFT, stated, 

“Swift is a community – a convener of and for our industry –, and I’m delighted that we’ve been able to facilitate these critical innovation experiments and show that institutions can continue to use much of their existing infrastructure alongside new, innovative technologies. Fragmentation is a challenge for the entire industry, and ensuring interoperability between networks is vital to addressing this while also enabling new technologies to scale and reach their full potential.”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.