(Reuters) – SWIFT, the global bank messaging network, is developing a platform designed to bridge the emerging world of central bank digital currencies (CBDCs) with existing financial infrastructure. With a launch targeted within the next 12-24 months.
With roughly 90% of central banks exploring digital currencies, SWIFT's initiative is a timely response to the growing potential of CBDCs. Central banks seek to keep pace with the rise of cryptocurrencies while overcoming technological hurdles. Key to SWIFT's success is the trial's emphasis on interoperability and integration.
A recent six-month SWIFT trial demonstrated the potential for seamless interaction among CBDCs built on diverse technologies. This crucial advance aims to reduce potential fragmentation within the future digital payment landscape. The trial underscored the potential for automation in complex trade and foreign exchange transactions, driving efficiency and cost reduction. With participation from 38 central banks, commercial banks, and settlement platforms worldwide – including major central banks from Germany, France, Australia, Singapore, Czech Republic, and Thailand, alongside prominent commercial banks like HSBC, Citibank, Deutsche Bank, Societe Generale, Standard Chartered, and the CLS FX settlement platform – the trial highlights significant global interest in CBDC development.
"This successful trial sets a foundation for our product launch," states SWIFT's head of innovation, Nick Kerigan. The 12-24 month timeline aligns with anticipated major CBDC rollouts. For SWIFT, this move reinforces its dominant position in the bank-to-bank network, crucial as countries like China, Jamaica, and Nigeria move forward with their own CBDCs.
SWIFT's extensive network, spanning over 200 countries and connecting over 11,500 financial institutions, provides a distinct advantage in the emerging world of digital assets. The company's demonstrated ability to enforce sanctions, as in the case of Russia, underscores its power, and representatives emphasise that such capabilities would remain possible in CBDC systems. The potential for a single connection point within SWIFT's network offers banks a scalable solution for handling digital asset payments. This scalability is crucial in light of projections that tokenized assets could reach $16 trillion by 2030, highlighting the potential for significant industry impact through SWIFT's platform
