SWIFT Advances CBDC Interlinking Solution: Details


The Society for Worldwide Interbank Financial Telecommunication (SWIFT) messaging network has unveiled the outcomes of the second phase of sandbox testing for its central bank digital currency (CBDC) interlinking solution, known as a connector.

In its report detailing the test results, SWIFT revealed that the project explored four distinct use cases, not all of which were solely focused on CBDC. 

Notably, the concept of CBDC is being tested around the globe, with countries like Sweden investing heavily in novel means of payment. As reported earlier by TheCoinRise, the Riksbank, the central bank of Sweden, has concluded its digital krona pilot project with the release of its final report, shedding light on the experiences of end-users and focusing particularly on offline functionality.

SWIFT Reveals Successful Results

One notable experiment involved digital trading with instantaneous settlement using smart contracts. 

Additionally, the project connected tokenization platforms to facilitate atomic delivery versus payment and collaborated with financial infrastructure firm CLS Group to showcase the connector’s capacity to link existing foreign exchange infrastructures using CBDC.

Liquidity Saving Mechanism

The fourth use case centered on leveraging SWIFT’s Liquidity Saving Mechanism algorithms to mitigate the fragmentation of liquidity across platforms, described as a “paper exercise” accompanied by bilateral discussions.

To demonstrate interoperability, the project utilized R3’s Corda, as well as the Hyperledger Fabric and Besu blockchains. The findings underscored the potential for a single point of access provided by SWIFT to empower institutions to leverage existing channels, tap into new networks, and reduce participation costs.

SWIFT Stresses on Demand for Interconnectivity

SWIFT stressed that while exploring CBDC solutions, traditional financial mechanisms would persist, highlighting the continued demand for interconnectivity.

Following the completion of sandbox experiments, SWIFT is set to advance the development of the beta version of its connector. Key focus areas include the implementation of smart contracts across networks, the cryptographic locking and releasing of tokens across networks, and the preservation of data and the programmability of tokens across networks.

125 Users Conducting 750+ Transactions

The sandbox trials saw active participation, with over 125 users conducting more than 750 simulated transactions, illustrating complex use cases for SWIFT’s CBDC interlinking solution.

Notable participants in the second phase included ANZ, Citibank, Deutsche Bank, DTCC, HSBC, Société Générale, Standard Chartered, Sumitomo Mitsui, and Shanghai Commercial & Savings Bank, alongside at least seven central banks or monetary authorities.

Interestingly, the Bangko Sentral ng Pilipinas (BSP) is also working on the wholesale central bank digital currency (wCBDC) of the Philippines. Further, the Nigerian Central Bank (CBN) has forged a partnership with blockchain infrastructure firm Gluwa to develop the e-Naira.

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