SWIFT moves to next phase of CBDC testing after positive results

According to a statement on March 9, the banking messaging platform Society for Worldwide Interbank Financial Telecommunications, or SWIFT, revealed that the financial institution is witnessing positive results related to its pilot test of connecting various central bank digital currencies (CBDC).

During a 12-week testing period, SWIFT simulated nearly 5,000 transactions between two different blockchain networks and existing fiat payment systems. Over 18 financial institutions from around the world participated in the survey, including Royal Bank of Canada, Banque de France, Société Générale, BNP Paribas, Monetary Authority of Singapore, HSBC, Deutsche Bundesbank, NatWest and others. As SWIFT said:

“Overall, the sandbox testing results found that Swift’s experimental interconnection solution can meet the needs of central and commercial banks for CBDC interoperability, ensuring that CBDCs can be successfully used in cross-border payments.”

In addition, SWIFT said there was a “strong degree of alignment” among participants regarding how CBDCs are likely to function in the future. For the next steps, SWIFT plans to launch the second phase of its CBDC sandbox and develop its “CBDC payment interconnection solution in beta with enhanced atomicity”.

In the next few years, SWIFT expects 24% of central banks to develop a CBDC solution. Over 110 central banks around the world are currently investigating CBDC use cases. Louis Sun, Global Head of Local and Emerging Payments at HSBC, commented:

“Interoperability is key to realizing the potential of CBDCs to enable real-time cross-border payments. As interest in CBDC grows, so does the risk of fragmentation as an ever-wider range of technologies and standards are experimented with.”

SWIFT CBDC Connector Payment Flow | Source: SWIFT