SWIFT is experimenting with decentralized technologies to allow for CBDC interconnections.

SWIFT, an interbank payment protocol and messaging system, today announced that it is working to connect various central bank digital currency (CBDC) protocols under development. The company has partnered with digital service provider Capgemini to conduct a series of experiments to see if the new set of CBDCs will provide cross-border payments and remittance capabilities.

SWIFT settings for modernizing connected systems

SWIFT, a banking and payment interconnection protocol, is working to serve the upcoming group of central bank digital currencies. Member-owned cooperatives presentation We are already experimenting with decentralized platforms to enable users of these currencies to use money transfers and cross-border payments in the future.

For SWIFT, the interconnection of this new kind of currency will be pivotal to its success. Although not many CBDCs are currently in operation, according to a report by the Bank of International Settlements, 9 out of 10 central banks are currently exploring the potential of CBDCs, which means they are interested in the subject.

Nick Kerigan, SWIFT’s Head of Innovation, spoke about the importance of this interconnection:

Different systems and different CBDCs need to be able to work together efficiently. Otherwise, it will hamper the ability of businesses and consumers to make frictionless cross-border payments using CBDCs.

CBDC experiment

An experiment SWIFT is conducting in collaboration with digital services company Capgemini is testing the ability of these new currencies to be exchanged between other systems not designed to perform these functions.

The inner workings of the system have not been explained to the public, but SWIFT makes it clear that some of the already existing payment infrastructure is being reused, including existing banking messaging standards and authentication models, ISO 20022, SWIFT’s private key infrastructure.

Experiments so far with several distributed ledger platforms such as Corda and Quorum show that the proposed goal can be achieved. This means that CBDCs can coexist with traditional fiat currencies using the SWIFT system in the transition phase to full digitalization.

SWIFT has also hinted at the possibility of including other types of crypto assets in its network, as it is regulated at a global level.

What do you think of the CBDC experiment SWIFT is conducting? Let us know in the comments section below.

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Sergio Goshenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as being late to the game, jumping into crypto when the price spike happened in December 2017. With a computer science background and living in Venezuela, influenced by the cryptocurrency boom on a social level, he offers a different perspective. He discusses the success of cryptocurrencies and how it helps them to be bankless and out of service.

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