Swift begins testing CBDC interlink with dozens of firms and central banks

Swift announced a new phase of its work on Central Bank Digital Currency (CBDC) interoperability, with three central banks, including the Hong Kong Monetary Authority (HKMA) and National Bank of Kazakhstan, beta testing its innovative solution for interlinking CBDCs and 30 financial institutions experimenting with the solution.

In the second phase of sandbox testing, commercial banks, central banks and financial market infrastructures are exploring additional use cases, including trigger-based payments for digital trade platforms, foreign exchange models, delivery vs payment and liquidity saving mechanisms.

The Reserve Bank of Australia, Deutsche Bundesbank, HKMA, Bank of Thailand and CLS are among the enlarged group of more than 30 leading institutions in this second phase. 18 central and commercial banks took part in the first phase of the sandbox.

Tom Zschach, chief innovation officer at Swift, said in a statement: “Our focus is on interoperability – ensuring that new digital currencies can seamlessly coexist with each other and with today’s fiat-based currencies and payment systems. The financial community has already recognized the strong potential of our CBDC innovations for preventing digital islands while securely bridging the payment systems of today and the future. This next phase of testing and exploration will help us further refine the solution to ensure it is as effective as possible, and at scale.”

Swift’s work on CBDCs began more than 18 months ago and, in the first phase of its experiments and sandbox testing, almost 5,000 transactions were simulated between two different blockchain networks and with existing fiat-based payment systems. Central and commercial bank participants noted that the connector enabled the seamless exchange of CBDCs, even for those built on different platforms.


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