The interbank payments protocol SWIFT announced working to connect the different CBDC protocols


The interbank
payments protocol and messaging system SWIFT has announced it is working to
bring its services to the upcoming group of central bank digital currencies and
to connect the different central bank digital currency (CBDC) protocols.
The company went
into a partnership with Capgemini, a digital services provider. Currently, the
member-owned cooperative is running a series of experiments with decentralized
platforms in which it is setting up interlinks between multiple domestic-based
CBDC networks. This will let the new set of CBDCs have cross-border payments available
for users and remittance capabilities.
The company
says they are already well advanced with the experiments. Shortly they will
publish the results to our community. The company is also looking beyond CBDCs
on how to enable interoperability between other digital assets and currencies
as they are developed and become regulated globally. Till now the experiments
have used several decentralized ledger platforms, like Corda and Quorum. This
shows that CBDCs could coexist with traditional fiat currencies using SWIFT
systems, in a transitional phase to total digitization.
It examines the
interlinking of different CBDCs in this collaborative proof of concept. SWIFT
didn’t explain to the public the inner workings of the system in place. Also clarifies
that several existing bank messaging standards and authentication models are
also reused which includes existing bank messaging standards and authentication
models, ISO 20022, and SWIFT private key infrastructure. The company said
that it is their goal to make the SWIFT solution accessible across SWIFT's
unique community of over 11,000 financial institutions in over 200 countries. The
interconnection of this new kind of currency will bring success for SWIFT.
The first set of CBDC experiments was conducted by SWIFT in 2021. These experiments demonstrate that successfully orchestrating a cross-border transaction between one entity on a DLT-based CBDC network and a second running on an established real-time gross settlement (RTGS) system can be set up. Currently, there are not many CBDCs operating. According to reports from the Bank of International Settlements, nine out of ten central banks are now exploring the possibilities of CBDCs, which shows there is interest in the subject. As per a report from the Bank for International Settlements, nine out of 10 central banks are now exploring CBDCs including Nigeria and the Bahamas. Now CBDC exploration is in the advanced stage which is covering economies that account for more than 90% of global GDP.

Indrani bose
CBW - External Analyst
INDIA