Beta Testing Underway for SWIFT’s CBDC Interlinking Solution

Beta Testing Underway for SWIFT's CBDC Interlinking Solution


SWIFT CBDC Connector Undergoing Testing by Central Banks

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has announced that 3 central banks are as of now testing its monetary authority digital currency (CBDC) interlinking solution. This connector was developed based on SWIFT’s experiences from its first CBDC sandbox earlier in the year. The goal is to provide a solution for interoperability between existing fiat currencies and new CBDCs. During the sandbox, thousands of transactions were simulated between blockchain systems and existing fiat systems.

Central Banks Integrating the Solution

The Hong Kong Central Bank (HKMA) and the National Bank of Kazakhstan are between the institutions that have already integrated SWIFT’s solution into their financial infrastructure for testing purposes.

Second CBDC Sandbox Launched

Additionally, SWIFT has launched a Second CBDC sandbox with over 30 financial institutions taking part . These institutions, including the Reserve Bank of Australia and Deutsche Bundesbank, will explore numerous use cases and applications for interconnected CBDCs.

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Interoperability and Liquidity

The results report from the first CBDC sandbox emphasizes SWIFT’s focus on achieving interoperability between different digital currencies and existing fiat-based currencies and payment systems. SWIFT intends to prevent liquidity from being siloed in separate networks without the  probable to interact with other systems.

Refining Solutions for Scale

SWIFT’s Chief Innovation Officer, Tom Zschach, describes that the new sandbox will assist refine their solution to secure its effectiveness at a larger scale.

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Preparing for Future CBDC Deployment

The bulk of G20 countries are already heavily involved in CBDC research, with some running pilot programs. SWIFT’s efforts in developing these solutions are aimed at facilitating interactions and scalability of CBDCs when they are deployed in the financial ecosystem.

Hot Take: Enhancing Interoperability for CBDCs

SWIFT is actively working towards enhancing interoperability between monetary authority digital currencies (CBDCs) and existing fiat systems. Through their interlinking solution, they intend to secure that new digital currencies can seamlessly coexist with each other and with traditional payment systems. By testing this solution with central banks and launching a Second CBDC sandbox, SWIFT is taking steps towards refining their solution and preparing for the future deployment of CBDCs. This effort aligns with the increasing interest and research on CBDCs by G20 countries. SWIFT’s commitment to interoperability will play a critical role in the widespread adoption and integration of CBDCs into the worldwide financial ecosystem.

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