The global interbank financial telecommunications network, SWIFT, has launched the beta version of its CBDC interoperability solution, which will allow central banks and financial institutions to interact with these digital currencies.
The first pilot of SWIFT's CBDC platform concluded successfully at the end of August, with the participation of 18 central banks. Now, the interbank communications network has launched the beta version and has started a new testing phase for its platform, which is focused on the interoperability of the financial system with central bank digital currencies (CBDC) based on the blockchain.
In a release, SWIFT reported the launch of the beta version of its CBDC platform indicating that, currently, three central banks and monetary authorities are experimenting with this solution to test its functionalities and explore new use cases.
El National Bank of Kazakhstan and Hong Kong Monetary Authority (HKMA) They are mentioned as part of the new testing phase of SWIFT's CBDC platform. These entities are integrating the CBDC solution with their respective infrastructures to test its advantages and potential.
SWIFT advances with the development of its CBDC platform
SWIFT develops its CBDC platform as an interoperability solution that will help connect traditional payment networks and CBDCs, which are based on the blockchain or DLT technology.
According to SWIFT, the solution allows central banks to issue and distribute CBDC securely and efficiently, as well as manage liquidity and risk. Furthermore, its platform also allows commercial banks and other financial market participants to access and use CBDCs for cross-border payments, which are one of the most active areas of innovation in the CBDC space, as many central banks are seeking improve the efficiency, security and financial inclusion of international transactions through these currencies and their underlying technology.
On the other hand, the global interbank communications network highlighted that, as part of the second test pilot, central banks, commercial banks and other financial market entities will be able to explore additional use cases for CBDCs, such as payments in digital commerce, currency models and liquidity saving mechanisms, among others.
Some of the banks that are part of the second phase of testing the SWIFT platform are the Reserve Bank of Australia, Deutsche Bundesbank, HKMA’s most emblematic landmarks, the Bank of Thailand y CLS. According to SWIFT, more than 30 banking institutions from around the world are participating in this phase.
Interoperability between CBDCs and fiduciary systems
SWIFT's goal with the beta version of its CBDC platform and its second sandbox is to ensure interoperability with banks' digital currencies.
As mentioned by SWIFT's chief innovation officer, Tom Zschach, the global network wants to ensure that new central bank digital currencies can coexist seamlessly with each other and with the fiat currencies and payment systems that exist today.
According to Zschach, the global financial community is recognizing the potential and innovation that comes with CBDCs. However, while some 130 countries are currently exploring CBDCs, each at different stages of development, the central bank digital currency landscape is fragmented primarily because each country is focusing on its particular needs and use cases.
Zschach commented that SWIFT's CBDC platform approach breaks this fragmentation by focusing on the interoperability of digital currencies and tokenized assets. SWIFT wants to securely unite the payment systems of today and the future, Zschach pointed out.
The CBDC platform that SWIFT is building supports any type of CBDC, whether retail or wholesale, account or token-based, or on a public or private blockchain. In addition to this, the platform also complies with SWIFT global standards to ensure security, traceability and transparency of transactions.
In addition to SWIFT, the Bank for International Settlements (BIS) and the International Monetary Fund (IMF) are also working, separately, on the development of new CBDC platforms with which to guarantee that global transactions and payments are carried out more efficiently and securely and, also, to interconnect the current financial system with the new digital economy.
Continue reading: SWIFT tests the circulation of CBDCs and tokenized assets
