Blockchain & Crypto

Swift Enters Beta Testing of CBDC Connector

Swift continues exploring CBDC interoperability, proceeding to the next testing phase with three central banks / monetary authorities and over 30 financial institutions involved

Swift Enters Beta Testing of CBDC Connector

Swift announced on Sept.13 that it has advanced its CBDC sandbox project, which involves an API-based CBDC connector, linking the centralised cryptocurrencies with existing fiat-based payment systems, to the second – beta testing – phase.

The interbank cooperative claims that the interest in its interoperability solution grows. Therefore, beta testing experiments involve over 30 financial institutions across the globe. Among those disclosed corporate names, are the Reserve Bank of Australia, Deutsche Bundesbank, HKMA, Bank of Thailand and CLS.

As for the national regulators, three central banks are currently testing the CBDC connector. These include the Hong Kong Monetary Authority (HKMA), the National Bank of Kazakhstan, and the third unnamed institution.

In the first experimental phase, the sandbox hosted two blockchain networks used to run CBDCs and a simulated Real-Time Gross Settlement (RTGS) network. Each network had regulator nodes and bank nodes incorporated. Meanwhile, the experimental Swift CBDC connector linked those blockchains to a simulation of Swift’s enhanced platform.

In the initial sandbox testing, almost 5,000 transactions were simulated between two different blockchain networks and with existing fiat-based payment systems. The CBDC connector infrastructure addresses interoperability not only for cryptocurrencies but also for other tokenized assets.

The next phase will explore additional use cases. In particular, the beta testing will focus on trigger-based payments for digital trade platforms, foreign exchange models, delivery vs. payment and liquidity saving mechanisms, etc.

“The financial community has already recognised 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.”

Tom Zschach, Chief Innovation Officer at Swift

Swift’s work on CBDCs began more than 18 months ago. Amid the increasing interest in central bank digital currencies, Swift aims to prepare an infrastructure enabling CBDCs to seamlessly scale if and when they are deployed into the national and international financial ecosystems.

We have earlier reported that Swift was also testing its infrastructure in terms of its suitability for the transfer of tokenized value over public and private blockchain networks.

Nina Bobro

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Nina is passionate about financial technologies and environmental issues, reporting on the industry news and the most exciting projects that build their offerings around the intersection of fintech and sustainability.