SWIFT Unveiling a New CBDC by 2025

SWIFT, an international bank messaging network, is planning a new platform in the next 12 to 24 months to link the wave of central bank digital currencies (CBDC) currently being developed to the present finance system. The strategy might be significant for the promising CBDC system due to the role of SWIFT in international banking. It may be adjusted to when the initial major ones are unveiled.

Nearly 90% of the globe’s central banks are currently exploring their currencies’ digital versions. A majority of people do not intend to be left behind by Bitcoin or other cryptocurrencies. However, they are contending with technological intricacies. 

Nick Kerigan, SWIFT’s head of innovation, claimed that its most recent trial had been one of the biggest international partnerships on central bank digital currencies as well as ‘tokenised’ assets to date. 

SWIFT Concludes Six-Month Trial on CBDC

This trial took six months and entailed a 38-member group of central banks. Further, the trial focused on ensuring that various nations’ central bank digital currencies can be utilised together even if developed on diverse underlying ‘protocols’ or technologies. 

Compatibility will help minimise the risks of fragmentation of payment systems. It also indicated they could be utilised in highly intricate foreign exchange payments or trade and possibly be automated to enhance and reduce the processes’ costs. 

According to Kerigan, the findings, which also demonstrated that banks could utilise their infrastructure, had been considered a success by participants. In an interview, he claimed they have a roadmap to unveil in the next one to two years. In this case, it is shifting from the experimental stage to reality.

There is a possibility of the timeframe shifting in case major economy central bank digital currency unveilings are delayed. However, getting out the blocks for when they do would be a significant boost for retaining SWIFT’s present control in the bank-to-bank plumbing network. 

Nigeria Leads Countries with Running CBDCs

Examples of nations whose CBDCs are up and running include Nigeria, Bahamans, and Jamaica. China has advanced with actual-life trials of an e-yuan., while the European Central Bank’s digital euro is ongoing. The Bank for International Settlements, the international central umbrella group, is implementing several cross-border trials.

SWIFT’s major benefit is that its network is currently usable in more than 200 nations and links more than 11500 funds and banks that utilise it to send significant amounts of dollars daily. The company has moved from being unfamiliar outside banking to a household name since 2022. 

At this time, several Russian banks were removed from its network as part of the West’s sanctions for the Ukraine attack. According to Kerigan, this type of strategy might still apply in a new CBDC system. However, he was uncertain whether it could stop nations from joining one. 

CBDC Trials Extend Beyond Europe Countries

Its most recent trials were reported in countries beyond Europe to Asian nations. The trials include German, Australia, Czech Republic, Australia, Thailand, and Singapore central banks. Besides, it involved others who sought anonymity.

Several central commercial banks, such as Deutsche Bank, HSBC, Standard Chartered, Societe Generale, the CLS FX settlement platform, and at least two Chinese banks, participated. The notion is that after expanding the interlink solution, banks would have a primary international connection point capable of handling digital asset payments instead of several in case they were to create one with each counterparty.

Kerigan also highlighted a prediction by Boston Consulting Group revealing that by 2030, assets worth nearly $16T could be ‘tokenised.’ This process entails the transformation of assets such as bonds and stocks into digital chips that can be provided and traded in real time. He noted that the ability to plug networks into the SWIFT network makes it a more scalable alternative for the sector. 

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