The company said it was moving to the second phase due to the satisfactory results obtained during the first phase of trials.
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has announcement advancing its central bank digital currency (CBDC) and is set to move into a second phase of testing to assess applications such as trade finance and securities settlement according to a Coindesk report based on the company’s announcement.
SWIFT occupies a very central position in the global financial ecosystem as the main channel through which different banks in different countries communicate. In order to maintain its relevance and align with the current evolution of the financial ecosystem, SWIFT is currently performing tests on how CBDCs can interact.
The company said it was moving to the second phase due to the satisfactory results obtained during the first phase of trials. The first trial, which included approximately 18 entities, is testing whether CBDCs can move between distributed ledger technologies (DLT) and the infrastructure that underpins the traditional financial system.
According to the results shared, the CBDC has worked as intended and stakeholders are now demanding improved developments at all levels.
“Our experiences have shown the critical role Swift can play in a financial ecosystem where digital and traditional currencies co-exist,” said Tom Zschach, chief innovation officer at Swift, adding that the “solution has been successfully tested on nearly of 5,000 transactions”. between two different blockchain networks and a traditional fiat currency, and we are excited to have the support of our community to develop it further. Many participants have clearly expressed their desire to continue their collaboration on interoperability, which is particularly gratifying. »
If SWIFT gets the breakthrough it needs when it comes to CBDC interoperability features, it will become quite easy to maintain its role in a CBDC-laden world in the near future.
SWIFT CBDC test, next steps
As the company announced, the next steps are now to test cross-border payments with respect to trade finance and securities settlement.
“Interoperability is key to realizing the potential of CBDCs to deliver real-time cross-border payments,” said Lewis Sun, global head of domestic and emerging payments, Global Payments Solutions at HSBC, one of the trial participants, adding “As interest in CBDCs increases, the risk of fragmentation also increases as an increasing range of technologies and standards are experimented with. Our continued collaboration with Swift, central banks and other commercial banks provides an invaluable platform to innovate solutions that can bring faster, cheaper and more secure cross-border payments.
Today, only a handful of countries, including the Bahamas and Nigeria, have a fully functional CBDC in circulation. Although the focus on adoption is a different topic, more and more countries, including the US, UK, and China, among others, are advancing research and testing of their own version. of CBDC.
So far, no major economy has a CBDC and there has been a call for unity in design, a call SWIFT has answered.
Benjamin Godfrey is a blockchain enthusiast and journalist who loves to write about real-world applications of blockchain technology and innovations to drive mainstream acceptance and global uptake of emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain-based media and sites. Benjamin Godfrey is a sports and agriculture enthusiast.