Swift has announced the results from the second-phase industry testing on CBDCs.
Takeaway points
- Swift has announced the results of the second phase of industry testing on its Central Bank Digital Currency (CBDC) interlinking solution.
- The aim of this testing is to enable interoperability between financial institutions.
- 38 institutions, which includes central and commercial banks as well as market infrastructure, participated in the experiments.
CBDCs Interlinking Solution
Swift, in a press-release on Monday, announced the results of the second-phase of industry testing on its Central Bank Digital Currency (CBDC) interlinking solution. The aim of this testing is to enable interoperability between financial institutions.
According to the report, the results show that its connector can enable financial institutions to carry out a wide range of financial transactions using CBDCs and other forms of digital tokens, easily incorporating them into their business practices.
This testing is one of the largest known collaborations on CBDCs. 38 institutions, including central and commercial banks as well as market infrastructures, participated in the experiments and the found out that Swift’s solution has the potential to simplify and speed up trade flows, unlock growth in tokenized securities markets, and enable efficient FX settlement, all while allowing financial institutions to continue to make use of their existing infrastructure.
Tom Zschach, Chief Innovation Officer at Swift, said he is glad that they have been able to simplify these critical innovation experiments and show that institutions can continue to use much of their existing infrastructure alongside new, innovative technologies.
“Swift is a community – a convener of and for our industry – and I’m delighted that we’ve been able to facilitate these critical innovation experiments and show that institutions can continue to use much of their existing infrastructure alongside new, innovative technologies. Fragmentation is a challenge for the entire industry, and ensuring interoperability between networks is vital to addressing this while also enabling new technologies to scale and reach their full potential,” he said.
Second-Phase Testing Result
Swift’s solution has already been shown to enable cross-border transfers and connect CBDCs on different networks with each other, as well as with fiat currencies.
According to the report, more than 750 transactions were carried out over the course of the experiments. The second phase of sandbox testing went further, exploring more complex use cases , using Swift’s solution to connect and orchestrate transactions across simulated digital trade and tokenised asset and FX networks, alongside CBDCs for payments.
Participants In the Testing
Participants in the sandbox came from around the world and across the industry, including central banks and monetary authorities from Australia, Czechia, France, Germany, Singapore, Taiwan, and Thailand, among others. Commercial bank and market infrastructure participants included ANZ; Citibank; CLS Group; DBS; Deutsche Bank; DTCC; HSBC; Hua Nan Commercial Bank; Intesa Sanpaolo; NatWest Group; Santander; Société Générale; Standard Chartered; Sumitomo Mitsui Banking Corporation; The Shanghai Commercial & Savings Bank, Ltd; The Standard Bank of South Africa; United Overseas Bank, and Westpac Banking Corporation.
Lewis Sun, Global Head of Domestic and Emerging Payments, Global Payments Solutions at HSBC, said that they are happy to collaborate with Swift and other industries to promote an open, inclusive, and technological payment system across different networks.
“The ability to interlink emerging and existing market infrastructures is essential to realizing the potential benefits brought on by tokenization and CBDCs. HSBC is excited to continue the collaboration with Swift and other industry peers to incubate an open, inclusive and technology-agnostic model that allows for more efficient payment-versus-payment, delivery-versus-payment, and trade settlement across different networks.” Lewis said
