SWIFT, a giant in the world of financial communications, has reached a significant milestone in its journey to integrate Central Bank Digital Currencies (CBDCs) onto the global stage. By completing the second stage of its testing, the company has broken new ground by demonstrating the effectiveness of distributed ledger technology (DLT) and smart contracts in exchanging CBDCs without the need to create a new digital currency.
Announced on March 25, the recent phase of the project explored the potential of SWIFT's solution to connect existing CBDC networks, utilizing DLT and smart contracts to ensure accurate and consistent transactions. The innovation shows promise for digital commerce, securities and international trade, and could even cover tokenized bank deposits in the future.
Breaking: #SWIFT is in the planning stages to launch a #CBDC platform within the next 12 to 24 months.
Wow i wasn't expecting this to be introduced so quickly! What are you thoughts? pic.twitter.com/yxNPAFTZ2T
— Paweł Łaskarzewski (@PawelSynapse) March 26, 2024
A crucial aspect of the test was its application to traditional financial sectors, including commercial payments and foreign exchange, as well as introducing liquidity-saving mechanisms. Using DLT networks such as Hyperledger Besu, R3 Corda and Hyperledger Fabric, the experiment facilitated the execution of atomic settlements and swaps. These processes, similar to the delivery versus payment method of the traditional financial system, promote a fast and secure exchange of assets, mediated by smart contracts that guarantee automatic execution under predefined conditions.
Considered one of the most significant CBDC tests to date, the project involved 38 institutions and more than 125 users, resulting in more than 750 transactions over six months. Additionally, sixty representatives from these institutions contributed valuable discussions to refine and expand the use cases explored.
SWIFT is now dedicated to developing a roadmap for the CBDC connector, in line with the growing global interest in CBDCs. With several countries already operating their own digital currencies and another 130 in the exploration phase, the SWIFT initiative is a vital step towards the integration of these currencies into the global financial infrastructure, aiming to improve the efficiency and security of transactions.
