SWIFT Experiments With CBDC Interoperability for Facilitating Cross-Border Payments

SWIFT, a global provider of secure financial messaging, is currently testing interlinking multiple emerging CBDC networks based in domestic countries for cross-border transactions. For the purpose of enabling financial institutions to communicate with one another for global payments, the Belgia-based network has turned to Capgemini, a French information technology services company and consulting firm.

CBDCs’ Interoperability

The official blog post states that SWIFT believes cross-border CBDC use may have been a problem for this digital currency because it was developed for domestic policy implementation. Thomas Zschach (SWIFT Chief Innovation Officer) believes that different CBDC systems must work together to facilitate “frictionless cross-border transactions.” SWIFT plays a part in this.

If we want to realize their full potential, it is crucial that interoperability and interlinking are possible between the different CBDCs around the globe. The global CBDC ecosystem is at risk of becoming fragmented as many central banks are developing their own digital currencies using different standards, technologies and protocols.

Nick Kerigan, Head of Innovation at SWIFT, stated that CBDCs are increasingly seen as “a new type of fiat currency”. Multiple such platforms will be created to integrate with traditional financial infrastructure.

SWIFT’s technology solutions are accessible by over 11,000 financial institutions from more than 200 countries. In this instance, SWIFT aims to provide a “highly scalable and easily integrated solution” to international payments via CBDCs.

This post also described the central feature of the experiment, which was the installation of a gateway to a national central bank digital currency network.

“The gateway will intercept and translate cross-border transactions on a network and then send them to SWIFT for transmission to another CBDC network.

Capgemini collaborated with SWIFT, revealing that SWIFT will focus on three use cases: CBDC to CBDC and CBDC-to-fiat. The giant also tried to make interoperability possible between digital currencies and other assets, beyond CBDCs.

The Spotlight on Russia’s Sanctions

SWIFT, the Society for Worldwide Interbank Financial Telecommunication, is the largest international financial messaging network. Financial institutions in the region are having trouble staying afloat since the West decided to exclude Russian banks.

Russia was kicked out of SWIFT to limit its ability to transfer funds and liquidate assets across institutions that are part of the system. The move was made to punish and isolate Russia. It also caused criticism from China and Russia, which were planning to migrate to their own messaging system to counter the effects of sanctions.

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Marla Brooks

Marla Brooks – Financial Analysis My name is Marla Brooks, and I am the mainstream behind the”observednews.com”  for the powerful and most delicate insights into the latest activities in the financial analysis category. I started my journey as an independent financial consultant. I had approximately nine years of experience in this field. I am free soul so; my passion for exploring the world has taken me to the nations across the globe and given me the chance to report for a portion of the best news associations. Currently, I am a full-time editor as experienced in finance and started to use my abilities.

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