SWIFT Successfully Tests Central Bank Digital Currency Solution, Plans for Future Implementation

On March 25, SWIFT announced that it has discovered several applications for its central bank digital currency (CBDC) solution after a six-month successful test. The company did not create its own CBDC but instead developed an interlinking solution for existing CBDCs, known as the SWIFT connector.

According to SWIFT, the core of their solution consists of a DLT and smart contract layer, which keeps consistent records of transactions. The platform is said to have applications in digital trade, securities, foreign trade, and potential expansions into bank-led tokenized deposit networks.

Specific use cases for the platform include trade payments, foreign exchange, delivery versus payment, and liquidity-saving mechanisms. SWIFT’s sandbox solution utilized multiple digital ledger technology networks, including Hyperledger Besu for the tokenization platform, R3 Corda and Hyperledger Fabric for buyer and seller networks and settlement instructions.

The platform also featured atomic settlements and swaps, as well as smart contracts to ensure payments were executed automatically upon meeting conditions. This aspect was highlighted in all four major use cases tested by SWIFT.

The company conducted its sandbox test with 38 institutions over six months, which it referred to as one of the largest CBDC experiments to date. Over 125 sandbox users conducted more than 750 transactions, with 60 representatives from participating financial institutions engaging in 20 collaborative working group meetings to discuss potential use cases.

SWIFT plans to develop a production roadmap for the SWIFT connector, with progress dependent on market developments and readiness. The service is expected to cater to the growing interest in CBDCs globally, with countries like China, the Bahamas, Jamaica, and Nigeria already having active CBDCs. Additionally, approximately 130 other countries and regions are exploring CBDCs, with recent developments in Europe, the Philippines, and Spain.

As SWIFT looks towards future implementation of its CBDC solution, the company’s successful test and promising results indicate a potential shift in the financial landscape towards digital currency solutions.


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