The Society for Worldwide Interbank Financial Telecommunication, aka SWIFT, announced that it had successfully moved central bank digital currencies (CBDC) and tokenized assets on existing financial infrastructure through two separate experiments.
Results showed that CBDCs can be rapidly deployed at scale to support trade and investment between more than 200 nations and territories around the world, according to the eight-month-long study by SWIFT in partnership with Capgemini and central banks from France and Germany.
Over 11,500 financial institutions are connected through the Belgian messaging system SWIFT, which is crucial in facilitating global trade and making it credible for cross-border CBDC transactions.
This is crucial since nine out of ten central banks worldwide are already actively investigating digital currencies.
Also Read: IMF Report Says there are 100 CBDCs as of July 2022
Through its partnership with Capgemini, SWIFT was able to settle transactions using both a fiat-to-CBDC payment network and CBDCs built on various distributed ledger technologies.
In order to hasten the transition to full-scale adoption, 14 central and commercial banks, including Banque de France, the Deutsche Bundesbank, HSBC, Intesa Sanpaolo, NatWest, SMBC, Standard Chartered, UBS, and Wells Fargo, are currently working together in a testing environment.
In the second experiment, SWIFT showed that different kinds of cash payments could be integrated with tokenization systems using its infrastructure. SWIFT investigated 70 scenarios mimicking the market issuance and secondary market transfers of tokenized bonds, shares, and cash while working with Citi, Clearstream, Northern Trust, and SETL.
By 2027, the tokenization business, according to the World Economic Forum, may be worth $24 trillion.
Making a single shared multicurrency system is the third strategy for CBDC adoption. The latter includes projects like Dunbar and MBridge, however, their implementations are somewhat dissimilar from one another.
Since it’s doubtful that all central banks will use the same platform or solution, SWIFT emphasizes the importance of interoperability. It’s possible that central banks will be hesitant to permit the international use of their CBDCs. Hence the justification for an exchange system using local money.
Tom Zschach, Chief Innovation Officer at SWIFT, noted, “For CBDCs, our solution will enable central banks to connect their own networks simply and directly to all the other payment systems in the world through a single gateway, ensuring the instant and smooth flow of cross-border payments.”
Last month, the BIS partnered with Israel, Norway & Sweden’s Central Banks for the CBDC project to explore international retail and remittance payments use cases for central bank digital currencies (CBDCs).
