Reports said that the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the Belgian financial messaging network used by banks in international money transfers, has announced that it is teaming up with French IT company Capgemini to conduct experiments with cross-border central bank digital currency (CBDC) payments.
It has been reported that this is SWIFT’s second research project on CBDC. SWIFT and Capgemini are testing ways to link multiple CBDC networks, as well as CBDC and traditional currency networks, as a proof of concept.
Thomas Zschach, the Chief Innovation Officer of SWIFT, said that the majority of central banks worldwide are working on creating CBDCs, “with numerous central banks developing their own digital currencies based on different technologies, standards, and protocols.”
However, according to the company’s statement, it is developing a gateway for domestic CBDC networks to intercept, translate and forward them to the SWIFT platform for onward transmission. The system will use existing SWIFT standards, authentication models, and infrastructure. SWIFT connects over 11,000 financial institutions in over 200 countries.
The report said that SWIFT’s new alliance is a continuation of the efforts begun last year with American professional services company Accenture. That collaboration succeeded in creating a cross-border transaction between a CBDC network and “an established real-time gross settlement (RTGS) system.”
“If the experiments are successful, it will demonstrate that SWIFT has the capability and technical components to interlink different networks.”
Nick Kerigan, the Head of Innovation at SWIFT, said:
“This would help solve a huge technology and industry challenge facing CBDCs. And it could enable us to help central banks make their own CBDC networks cross-border payment ready.”
Thus, SWIFT processed 42 million messages a day last year, but transactions on the network can take several days to complete. It is striving to maintain its relevance in the international economic order, especially in regard to CBDCs. Many developers foresee CBDCs interacting outside the traditional network, potentially with the aid of Ripple (XRP).