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SWIFT to Launch New Central Bank Digital Currency Platform

The SWIFT global banking messaging network has intentions of creating a new platform to connect multiple central bank digital currencies (CBDC) to the existing financial system.

SWIFT Plans to Launch of New Central Bank Digital Currency Platform

The media reports that the mentioned plan will be implemented within the next two years. At the same time, it is noted that the new platform may be launched as early as next year. It is worth noting that the SWIFT initiative is one of the most ambitious in the context of the development of the CBDC ecosystem, which is currently at the stage of gradual formation. Nowadays, there is an increasing number of financial regulators around the world demonstrating interest in digital currency.

In the context of the potential impact of the new platform on the CBDC ecosystem, it is worth noting the significant role of SWIFT in global banking. The functional space intended for digital currencies of financial regulators will likely be formed by the time the first virtual assets of the corresponding category are launched.

According to preliminary information, currently, about 90% of central banks are exploring the prospects of CBDC. Most of the mentioned institutions, realizing the specifics of the current realities in the financial sector, do not want to form a kind of gap behind cryptocurrencies, but at the same time face various technological difficulties in implementing relevant projects.

Nick Kerigan, head of SWIFT’s innovation unit, said that the latest trial, which took six months and involved a group of central banks, commercial lenders, and settlement platforms, was one of the largest global joint initiatives on CBDC and tokenized assets to date. This project was focused on ensuring that all digital currencies of the specified category could be used together. The possibility of using it within the framework of the specified initiative was envisaged, even if CBDCs are based on different underlying technologies or protocols. In this case, the risk of fragmentation of payment systems is reduced. Moreover, the project has become an example of how CBDC can be used in highly complex trading operations or foreign exchange payments and can potentially be automated to speed up and lower costs for the mentioned processes.

Nick Kerigan stated that the test results proved that banks can use their existing infrastructure within the framework of applying digital currencies. Separately, he noted that these results were positively evaluated by the project participants and gave SWIFT a timeline to work to. According to him, the messaging network is considering a roadmap for launching a platform for CBDC in the next 12-24 months. Nick Kerigan stated that this project is moving from the experimental stage to what is becoming a reality.

It’s worth noting that the launch of a new platform largely depends on the decisions and actions of central banks. In major economies, the introduction of CBDC may be delayed. At the same time, the new platform, regardless of the circumstances and the time of its launch, will be a significant incentive for SWIFT to maintain its dominance in the interbank payment network.

In countries such as Jamaica, the Bahamas, and Nigeria, CBDC has already been fully implemented into local financial systems. China has made significant progress in conducting real-life trials of the electronic yuan. The European Central Bank is also implementing the digital euro one project. At the same time, the Bank for International Settlements conducts multiple cross-border trials.

SWIFT’s advantage as a CBDC solution provider is that its existing functional network is already used in more than 200 countries and connects more than 11,500 financial institutions and funds. Transactions worth several trillion dollars are processed daily on this network.

As we have reported earlier, SWIFT Tests Use of Its Infrastructure for Transfers Over Blockchains.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.