Global payments network Society for Worldwide Interbank Financial Telecommunication (SWIFT) is partnering with French consultancy Capgemini to conduct new experiments and test how domestic central bank digital currencies (CBDCs) can be interlinked, taking the next step toward cross-border payments utilizing such currencies.
“Facilitating interoperability and interlinking between different CBDCs being developed around the world will be critical if we are to fully realise their potential,” said Thomas Zschach, Chief Innovation Officer at SWIFT, as quoted in a statement.
Zschach noted that the global CBDC ecosystem today risks becoming fragmented given that “ numerous central banks” are currently developing their own digital currencies based on different technologies, standards, and protocols.
SWIFT launched its first experiments with CBDCs in 2021, seeking to demonstrate that the payments network could successfully carry out a cross-border transaction between one entity on a distributed ledger technology (DLT)-based CBDC network and a second entity running on a real-time gross settlement (RTGS) system.
In its new set of experiments, SWIFT aims to take its capacities to the next level by testing how its network can interlink the multiple domestic-based CBDC networks from across the world. SWIFT says its objective is to make cross-border payments involving CBDCs more seamless and frictionless for the network’s users.
The network recognizes that not all CBDCs will adopt the same technology, given that some national platforms are being built with the use of a centralized architecture while others are based on DLT. With this in mind, SWIFT wants to test how it can interlink, CBDC platforms at a network level, regardless of the technology they use, with the world’s existing payments systems through the SWIFT platform.
“Navigating decentralisation is complex with many technology choices, operating models, and policy considerations,” said Sudhir Pai, Chief Technology & Innovation Officer for the Global Financial Services business at Capgemini. “Our well-defined taxonomy has helped us accelerate our efforts to build CBDC interlinks with SWIFT,” Pai claimed, adding: “We look forward to continue to collaborate in building industry standards and frameworks with SWIFT.”
Source: Cryptonews
