SWIFT, the interbank payment protocol and messaging system, has announced today that it is working to connect the various central bank digital currency (CBDC) protocols in development. The company has partnered with digital services provider Capgemini, which is conducting a series of experiments to ensure that the new set of CBDCs have cross-border payments and remittance capabilities.
Swift set to modernize connection system
SWIFT, the bank and payment interconnection protocol, is working to bring its services to an upcoming group of central bank digital currencies. The member-owned cooperative has announced that it is already experimenting with decentralized platforms to ensure that remittances and cross-border payments will be available to users of these currencies in the future.
For SWIFT, the interconnection of this new kind of currency will be critical to its success. Although there are not many CBDCs currently operating, nine out of ten central banks are now exploring the possibility of CBDCs, according to a report by the Bank of International Settlements, which means there is interest in the topic.
Commenting on the importance of this interconnection, Nick Kerrigan, Head of Innovation at Swift, said:
Different systems and different CBDCs will need to be able to work efficiently together, or it will hinder the ability of businesses and consumers to make cross-border payments using CBDCs.
The experiments that SWIFT is doing in partnership with Capgemini, a digital services company, are testing the ability of these new currencies to be exchanged between different systems not designed to perform such functions. .
While the inner workings of the system are not explained to the public, SWIFT clarifies that part of the already existing payment infrastructure, including existing bank messaging standards and authentication models, ISO 20022, and SWIFT’s private key infrastructure, can be reused. He is going.
So far, experiments using multiple decentralized ledger platforms such as Corda and Quorum suggest that it may be possible to achieve the proposed goals. This would mean that CBDCs can coexist with traditional fiat currencies using the SWIFT system in the transitional phase of total digitization.
SWIFT also hinted at the possibility of incorporating other types of crypto assets into its network, as they become regulated globally.
What do you think about the CBDC experiments being carried out by SWIFT? Tell us in the comments section below.
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