Swift to Test CBDC Interoperability with Central Banks
Interbank messaging company Swift has announced that it will be conducting the second phase of its sandbox experiments with a central bank digital currency (CBDC) to explore the potential for interoperability. The project aims to develop an interlinking solution for CBDC and involves the participation of three central banks and 30 financial institutions.
The participating central banks include the Reserve Bank of Australia, Deutsche Bundesbank, the Hong Kong Monetary Authority (HKMA), Bank of Thailand, and CLS. The experiment will focus on exploring new use cases for CBDC, such as trigger-based payments for digital trade platforms, foreign exchange models, delivery vs. payment, and liquidity saving mechanisms.
The first phase of Swift’s experiment, completed in March 2023, demonstrated that CBDCs can enhance the speed and efficiency of cross-border payments while reducing costs. It also highlighted the need for interoperability between CBDCs issued by different central banks to facilitate seamless transactions.
Hot Take: Swift Advances CBDC Interoperability Testing
Swift is taking further steps in its exploration of central bank digital currencies (CBDCs) by initiating the second phase of its sandbox experiments. By collaborating with three central banks and 30 financial institutions, Swift aims to develop an interlinking solution that enables interoperability between different CBDCs.
This latest phase will explore various use cases for CBDCs, including trigger-based payments for digital trade platforms, foreign exchange models, delivery vs. payment, and liquidity saving mechanisms. The results from the first phase demonstrated that CBDCs can improve cross-border payments’ efficiency and reduce costs.
Swift’s ongoing efforts in CBDC testing highlight its commitment to staying ahead of the curve in the evolving financial landscape. As the financial community recognizes the potential of CBDC innovations, Swift aims to be prepared to scale the usage of digital currencies and tokenized assets when they are deployed.
By
By
By