Swift Enters Second Phase of CBDC Experiments
Swift, the global provider of financial messaging services, has entered the second phase of its central bank digital currency (CBDC) sandbox experiments. In this phase, over 30 institutions, including the Reserve Bank of Australia, Deutsche Bundesbank, HKMA, and Bank of Thailand, are participating.
The focus of this phase is to explore various use-cases for CBDCs, including trigger-based payments for digital trade platforms, foreign exchange models, delivery vs payment, and liquidity saving mechanisms.
Success in Initial Testing Phase
Prior to this, Swift conducted an initial testing phase involving 18 global financial institutions such as HSBC, Banque de France, and the Royal Bank of Canada. During this period, participants successfully processed 4,736 transactions between the Quorum and Corda blockchain networks, as well as between Corda and a fiat currency.
Potential Competition from Unified Ledger
Swift currently dominates the digital payments landscape with its extensive network connecting more than 11,000 banks and financial institutions worldwide. However, it may face competition from the Bank for International Settlement’s (BIS) Unified Ledger global CBDC system. This system aims to tokenize international central bank money and various assets on a single platform.
Countries Exploring CBDCs
According to the Atlantic Council CBDC tracker, 130 countries representing 98% of global GDP are currently exploring CBDCs. Among the G20 countries, 19 are in the advanced stage of CBDC development. Eleven countries have already fully launched a CBDC, including China, The Bahamas, Nigeria, Anguilla, Jamaica, and seven Eastern Caribbean countries.
The United States is one of the few countries without confirmed plans to launch a digital currency, although it is progressing with a wholesale CBDC for bank-to-bank transactions.
Hot Take: Swift Explores CBDC Use-Cases in Second Phase of Sandbox Experiments
Swift, the global financial messaging services provider, has moved into the second phase of its central bank digital currency (CBDC) sandbox experiments. With over 30 institutions participating, this phase aims to explore various use-cases for CBDCs, including trigger-based payments, foreign exchange models, and liquidity saving mechanisms. The initial testing phase involving 18 financial institutions was successful in processing thousands of transactions across different blockchain networks. However, Swift faces potential competition from the Bank for International Settlement’s Unified Ledger system. As countries worldwide continue to explore CBDCs, the United States remains one of the few without confirmed plans for a digital currency.
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