SWIFT Is Experimenting With Decentralized Technologies to Allow CBDC Interconnection – The interbank payments protocol and messaging system SWIFT has announced that it is working to integrate the various central bank digital currency (CBDC) systems currently in development.
The company has teamed up with Capgemini, a digital services provider, to conduct a series of tests to ensure that the new CBDCs can make cross-border payments and remittances.
The bank and payments interconnection protocol SWIFT is working to expand its services to the future group of central bank digital currencies. The member-owned cooperative has said that it is already testing decentralized platforms to guarantee that remittances as well as cross-border payments would be available in the future for users of these currencies.
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The interconnection of this new type of currency, according to SWIFT, will be critical to its success. While there aren’t many CBDCs operating right now, the Bank of International Settlements estimates that nine out of ten central banks are now looking into the possibility of CBDCs, indicating that the concept is gaining traction.
The importance of this interconnection was highlighted by Nick Kerigan, Head of Innovation at SWIFT, who stated:
“Different systems and CBDCs must be able to communicate effectively with one another, otherwise businesses and consumers will be unable to make seamless cross-border payments utilizing CBDCs.”
SWIFT’s trials, which are being carried out in collaboration with Capgemini, a digital services business, are examining the ability of these new currencies to be exchanged between systems that were not built to do so.
While the inner workings of the system in place have not been revealed to the public, SWIFT stresses that existing bank messaging standards as well as authentication models, ISO 20022, and SWIFT’s private key infrastructure are all being employed.
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So far, the trials, which have used numerous decentralized ledger platforms such as Corda and Quorum, have shown that the desired aims are achievable. In a transitional period to total digitalization, CBDCs might coexist with existing fiat currencies via SWIFT networks.
As crypto assets become more regulated on a worldwide scale, SWIFT hinted at the prospect of incorporating them in its network.