Swift takes forward its CBDC innovation

Swift has announced that it is starting the second phase of its CBDC innovation. The goal is to drive the interoperability aspect of CBDC by having participants get their hands on the innovation in the most real-world environment. Making this interesting is the fact that the second phase is a sandbox experiment with over thirty financial institutions participating in it.

The idea is to meet the futuristic demand for fueling interoperability when it comes to Central Bank Digital Currency. Thirty financial institutions are participating in the experiment, which will help Swift explore more use cases.

Central banks and authorities participating in the experiment are the National Bank of Kazakhstan and the Hong Kong Monetary Authority, to mention a few. They are mainly conducting the test by integrating the service directly into their own platform. The second phase of the experiment takes the progress a little further. It consists of exploring foreign exchange models and trigger-based payment models.

Tom Zschach from Swift has highlighted that the focus will remain on interoperability. The Chief Innovation Officer of the company has further stated that they will make sure that all the digital currencies coexist with each other and with fiat currencies. Moving forward, the goal is to refine the solution with a couple of more tests, said Tom, as he confirmed that they will enable scalability and effectiveness in the solution.

CBDC is a digital currency that is issued by central banks. It is pegged to fiat currency and helps people explore Web3 payments in a safe environment. According to the Atlantic Council, there are currently 130 countries that are exploring CBDC. Those in the advanced stages are 19 countries that are also members of the G20. Nine of them have launched the project in its pilot version.

Simply put, there are countries that are making advancements, yet there is a need to introduce innovation like the CBDC Connector.

Swift began working on the CBC Connector 18 months ago. In its first phase, nearly 5,000 transactions were simulated between different blockchain networks. This happened securely with a payment system that handles fiat currencies. A seamless operation has been noted by central banks and other participants, making Swift aware that the potential is likely to be huge.

The development comes days after Swift announced that its cross-border payments processing speed has not just met the target of the G20, but it has surpassed that milestone by processing 89% of cross-border payments in 1 hour. The original target was 75%, to be achieved by 2027. Data made available by Swift also underlines that a lot of international payments involved only a single intermediary.

Calling this outcome a tangible result, Thierry Chilosi, the Chief Strategy Officer of Swift, has stated that they will continue to work with the financial community to foster inclusive global growth built on a seamless movement worldwide.

Scott Cook

Scott Cook got into crypto world since 2010. He has worked as a news writer for three years in some of the foremost publications. He recently joined our team as a crypto news writer. He regularly contributes latest happenings of crypto industry. In addition to that, he is very good at technical analysis.

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