Three Central Banks Conducting CBDC Pilots, Reports SWIFT
According to an notice from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), 3 central banks have initiated pilots for monetary authority digital currencies (CBDCs). SWIFT states that it is now progressing with CBDC interoperability and that the Hong Kong Central Bank (HKMA) and the National Bank of Kazakhstan are as of now integrating the new solution into their infrastructure for direct testing. The third monetary authority involved in the pilot remains unnamed.
The focus of SWIFT’s work is on ensuring interoperability between different CBDCs as well as with existing fiat currencies and payment systems. With approximately 130 countries actively exploring CBDC technology, SWIFT acknowledges the capacity for fragmentation issues in the future. Therefore, developing interoperability solutions is a top priority for the organization.
SWIFT’s “Connector” Technology Enables Seamless Transactions
SWIFT outlines that its new “connector” technology has already facilitated seamless transactions between different blockchain-based CBDC systems built on diverse frameworks. The organization has been working on CBDCs for over 18 months, conducting experiments and sandbox testing. During the initial phase, nearly 5,000 simulated transactions took place between two different blockchain networks and existing fiat-based payment systems. Participants from central and commercial banks pointed out that the connector allowed for smooth exchange of CBDCs, even when built on different platforms.
Hot Take: Ensuring Interoperability for CBDCs is Crucial for Worldwide Adoption
As central banks around the globe continue to explore CBDC technology, ensuring interoperability between different digital currencies becomes essential for worldwide adoption. SWIFT’s efforts to develop a solution that allows seamless coexistence between CBDCs and traditional payment systems are commendable. By addressing probable fragmentation issues, SWIFT intends to create a unified and efficient financial ecological system. The successful completion of these CBDC pilots by the 3 central banks will be a whole lot of step forward in the evolution of digital currencies and their integration into the worldwide financial landscape.
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