- SWIFT announces plans for a global Central Bank Digital Currency
- The trial included big names like HSBC, Standard Chartered, and UBS.
- The project evaluated whether CBDCs could be used globally and converted into fiat cash if needed.
After 8 months of testing several technologies and currencies, the interbank payments network SWIFT has released its plan for a global central bank digital currency (CBDC) network. The news comes amid a recent uptick in demand for CBDCs, with nations like Iran launching a CBDC pilot just days ago.
Per a Reuters report, the trial, which included the central banks of France and Germany and multinational institutions like HSBC, Standard Chartered, and UBS, tested the feasibility of using CBDCs worldwide and converting them into fiat currency if the situation demands it.
According to SWIFT’s head of innovation Nick Kerigan, the trial resembled a hypothetical bicycle wheel, with 14 central and commercial banks connecting spoke-like into the main hub for further testing over the coming years.
Kerigan claims that once the idea is scaled up, banks may require only a single worldwide link rather than the thousands of connections they would need if they established links with each counterpart separately.
Additionally, Kerigan explained why a global CBDC network could succeed:
Ultimately what most central banks are looking to do is to provide us with a CBDC for the people, the businesses, and the organizations in their jurisdiction. So a solution that’s fast and efficient and that gains access to as many other countries as possible would seem to be an attractive one.
Additionally, the trial examined many Distributed Ledger Technologies that form the backbone of CBDC. The complexity of implementing the necessary technological solutions has also been cited as a potential barrier to widespread adoption.
Furthermore, in a separate trial, Citi, clearing house Clearstream, and Northern Trust also tested the feasibility of issuing and trading digital tokens based on traditional assets such as equities and bonds.
CBDCs aren’t Swift’s only area of interest. On September 28th, the largest interbank payments system in the world revealed that it was collaborating with price feeds provider Chainlink on a cross-chain interoperability protocol (CCPI) for a proof of concept.
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