SWIFT, the global bank messaging network, has added three central banks to its central bank digital currency (CBDC) interoperability project's beta phase. It's a significant step toward establishing a standardized framework for CBDCs and enhancing cross-border transactions.




SWIFT Enrolls 3 Central Banks in CBDC Interoperability Beta Test, Expands Sandbox


SWIFT, the leading bank messaging platform, is making substantial progress in its efforts to foster central bank digital currency (CBDC) interoperability. The company recently welcomed three central banks into the beta phase of its CBDC interoperability project, signaling a major step toward streamlining CBDC transactions and cross-border interactions.


The Hong Kong Monetary Authority, the Central Bank of Kazakhstan, and an undisclosed central bank have successfully integrated their infrastructure with SWIFT's "CBDC connector solution." This move allows them to engage in direct testing and experimentation as part of the ongoing project.


SWIFT initiated its sandbox testing for CBDC interoperability back in March, with over 18 participants, including esteemed financial institutions like the Royal Bank of Canada, Banque de France, Société Générale, BNP Paribas, Monetary Authority of Singapore, HSBC, Deutsche Bundesbank, and NatWest. During the initial 12-week sandbox phase, the platform recorded more than 5,000 transactions. Now, the program is set to expand even further, with the participation of more than 30 entities.


SWIFT's involvement in CBDC-related projects reflects the evolving landscape of digital currencies and cross-border transactions. As a global messaging network connecting over 11,500 financial institutions worldwide, SWIFT plays a pivotal role in the financial sector. While CBDCs have the potential to transform the industry, they also pose challenges to SWIFT's traditional messaging services.


In August, SWIFT reported a significant increase in transaction processing speed, with 89% of transactions now being settled within one hour, surpassing the G20's target of achieving 75% one-hour settlements by 2027. Additionally, 84% of transactions on the network are conducted directly or with a single intermediary. However, real-world factors like regulatory controls, business hours, and batch processing still impact the speed of wholesale payments, with only 60% of such transactions concluding within an hour.


SWIFT's commitment to CBDC interoperability and enhanced transaction efficiency underscores its willingness to adapt and innovate in the face of evolving financial technologies. The collaboration between SWIFT and central banks marks a crucial development in the journey toward a more interconnected and efficient global financial ecosystem.


(DEREK ANDERSEN, CoinTelegraph, 2023)