Swift Testing Interlinking CBDC Solutions With Three Central Banks

Global messaging platform Swift says three central banks are testing its solution for interlinking CBDCs.

In the meantime, another 30 financial institutions are experimenting with the solution in a new “sandbox to explore further use cases” for central bank digital currencies (CBDCs), the organization announced Wednesday (Sept. 13).

“Our focus is on interoperability — ensuring that new digital currencies can seamlessly coexist with each other and with today’s fiat-based currencies and payment systems,” Tom Zschach, Swift’s chief innovation officer, said in a news release provided to PYMNTS.

“The financial community has already recognized 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.”

As noted here in April, interoperability is key for the development of CBDCs.

“Each central bank can conceivably — if it has the willpower and the digital infrastructure in place and the acceptance of businesses and consumers — launch a CBDC that works well for domestic commerce and disbursements of government aid,” PYMNTS wrote.

“For CBDCs to truly gain ground, though, they need to be interoperable across borders to facilitate trade and commercial payments in the global age, existing alongside and interacting with far-flung payment systems.”

According to Swift, three central banks and monetary authorities — among them the Hong Kong Monetary Authority (HKMA) and the National Bank of Kazakhstan — have agreed to integrate Swift’s connector solution into their infrastructures for direct testing.

In addition, Swift has also begun a second phase of sandbox testing, with commercial banks, central banks and financial market infrastructures exploring uses such as “trigger-based payments for digital trade platforms, foreign exchange models, delivery vs. payment and liquidity saving mechanisms,” the release said.

Wednesday’s announcement follows last month’s news that Swift had exceeded some targets in speeding up cross-border payments. The platform said that 89% of the cross-border payments made through its service are being processed within an hour.

As PYMNTS wrote, SWIFT’s performance surpasses the G20’s Financial Stability Board’s goal, which targeted 75% of international transactions to go through in an hour by 2027.