SWIFT to test CBDC interoperability in cross-border payments

SWIFT протестирует the compatibility of different CBDC platforms in cross-border payments.

“Ensuring functional interoperability and interconnections among the various CBDCs being developed around the world will be crucial to realising their potential. Today, the global CBDC ecosystem risks becoming fragmented as central banks develop their own digital currencies based on different technologies, standards and protocols,” said Thomas Chah, SWIFT’s Director of Innovation.

In 2021 the company conducted a series of successful experiments on the functional interoperability of CBDCs with existing payment systems based on inter-bank messaging.

In a new phase, SWIFT is partnering with consulting firm Capgemini. The partners will test the ability to link CBDC platforms at the network level, regardless of their technology, with one another and with existing systems.

The experiments involve creating a gateway that intercepts cross-border transactions and forwards them to the SWIFT platform for onward transmission to a traditional payment rail or to another CBDC network.

“If the experiments are successful, this will demonstrate that SWIFT has the capabilities and technical components to connect different networks. This would help solve the enormous technological and industry-wide problem facing CBDCs. And it would enable us to help central banks prepare their own digital currency networks for cross-border payments,” said Nick Kerrigan, head of SWIFT’s Innovation Department.

The company said it had made good progress in testing. SWIFT will publish its progress report in the near term.

In March, BIS, in collaboration with the central banks of Australia, Malaysia, Singapore and South Africa, completed the experiment in using CBDCs for cross-border settlements. In the course of this, the partners created two prototypes of a digital currency platform.

A May BIS study showed that 90% of central banks study CBDCs. Most regulators favour projects oriented to retail use cases.