SWIFT, an interbank messaging and payments protocol, announced that it is currently working to connect different central bank digital currencies (CBDC), protocols. Capgemini, a digital service provider, has been partnered with SWIFT to conduct a series experiments to ensure the new CBDCs can make cross-border payments as well as remittances.
SWIFT to Modernize Connection Systems
SWIFT, the interconnection protocol between SWIFT and the bank, is working to provide its services to the new group of central banks’ digital currencies. The member-owned cooperative has already reported that it is running experiments with decentralized platforms in order to make sure that cross-border and remittances are available for users of these currencies.
The interconnection of the new currency type will be crucial for SWIFT’s success. Although there aren’t many CBDCs currently in operation, reports from the Bank of International Settlements indicate that nine of ten central bank are exploring CBDCs. This indicates that there is an interest in this subject.
Nick Kerigan, Head Innovation at SWIFT, commented on the importance and value of interconnection.
Different systems and CBDCs must be able work together efficiently or it will hinder the ability of consumers and businesses to make cross-border payments with CBDCs.
CBDC Experiments
In partnership with Capgemini (a digital services company), SWIFT is testing whether these currencies can be used to exchange between systems that are not specifically designed for such functions.
Although the details of the system are not known, SWIFT clarifies the fact that a portion of the existing payments infrastructure, including existing banking messaging standards and authentication models as well as ISO 20022 and SWIFT’s private key infrastructure, is being reused.
The experiments that use Corda and Quorum as decentralized ledger platforms have shown it is possible to reach the goals. In a transitional phase, CBDCs can coexist with traditional fiat currencies via SWIFT systems.
SWIFT hinted that other types of crypto assets could be included in its network as they are regulated globally.
