SWIFT Says It's Proved It Can Be the Way Forward for Global CBDCs
SWIFT, the interbank messaging system facilitating cross-border payments, has presented a framework for a global central bank digital currency (CBDC) system, claiming to have solved the challenge of interoperability between different networks.
Following experiments involving the central banks of France and Germany as well as HSBC, NatWest, Standard Chartered, UBS and Wells Fargo, SWIFT said it has carried out transactions between different blockchain networks, using both CBDCs and fiat currencies.
With the vast majority of central banks exploring development of digital currencies, attention has turned to how the CBDCs of different countries could interact when using different networks.
The experiments demonstrate that "blockchain networks could be interlinked for cross-border payments through a single gateway, and that SWIFT’s new transaction management capabilities could orchestrate all inter-network communication," SWIFT said Wednesday.
SWIFT is a messaging system that supports international bank transactions. Its network is used in more than 200 countries by over 11,000 financial institutions.
However, there have been suggestions that digital currencies in the form of crypto, stablecoins or CBDCs could turn SWIFT into an also-ran.
SWIFT therefore embarked on a series of experiments in December 2021 to demonstrate that it was ahead of the digital currency curve.
Alongside its work on CBDCs, SWIFT also explored tokenized assets, whereby assets like stocks and bonds are transformed into tokens which can be issued and traded in real time.
SWIFT said it can serve as a single access point to different blockchains and that its infrastructure could be used to create and trade tokens across tokenization platforms.
Earlier this week, CoinDesk reported that SWIFT was working with Chainlink, a provider of price feeds and other data to blockchains, on a cross-chain interoperability protocol to facilitate token transfers across all blockchain networks.
Read more: New Global CBDC Platform Could Cut Payment Costs, IMF Says