SWIFT, the interbank payments protocol and messaging system, has announced it is working to connect the different central bank digital currency (CBDC) protocols in development today. The company has partnered with Capgemini, a digital services provider, making a series of experiments to ensure that the new set of CBDCs have cross-border payments and remittance capabilities.
SWIFT Set to Modernize Connection Systems
SWIFT, the bank and payments interconnection protocol, is working to bring its services to the upcoming group of central bank digital currencies. The member-owned cooperative has announced it is already running experiments with decentralized platforms to ensure that remittances and cross-border payments will be available for users of these currencies in the future.
To SWIFT, the interconnection of this new kind of currency will be pivotal for its success. While there are not many CBDCs operating currently, according to reports from the Bank of International Settlements, nine out of ten central banks are now exploring the possibilities of CBDCs, meaning that there is interest in the subject.
Nick Kerigan, Head of Innovation at SWIFT, remarked on the importance of this interconnection, stating:
Different systems and different CBDCs will need to be able to efficiently work together, or it will hamper the ability of businesses and consumers to make frictionless cross-border payments using CBDCs.
The experiments that SWIFT is performing, in partnership with Capgemini, a digital services company, are testing the ability of these new currencies to be exchanged among different systems not designed to perform such functions.
While the inner workings of the system in place have not been explained to the public, SWIFT clarifies that part of the already existent payments infrastructure is being reused, including existing bank messaging standards and authentication models, ISO 20022, and SWIFT’s private key infrastructure.
So far, the experiments, which use several decentralized ledger platforms, such as Corda and Quorum, show it could be possible to achieve the goals proposed. This would mean that CBDCs could coexist with traditional fiat currencies using SWIFT systems, in a transitional phase to total digitization.
SWIFT also hinted at the possibility of including other kinds of crypto assets in its network, as they become regulated at a global level.
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