Swift has reported favorable results from a pilot test of transfers between different central bank digital currencies (CBDCs), saying they see “clear potential and value” in it.
The trial focused on how CBDCs can interoperate with the help of an API-based CBDC connector, which was tested with two different blockchain networks and existing fiat-based payment systems.
According to a press release released by Swift, all participants in the pilot expressed “strong support” for the continued development of the solution. The members also said that the CBDC connector used in the simulations enabled “seamless exchange of CBDCs,” and that this applied to transfers between CBDCs built on different platforms.
The latter is seen as vital, given the danger of fragmentation as central banks everywhere all create their own CBDCs.
Now that the pilot test is finished, Swift will be moving on to producing a beta version of the system for further testing by central banks. Following that, a second phase of sandbox testing will be held for participants to explore new use cases, including in securities settlement, trade finance, and conditional payments, Swift said in the press release.
Simulated transactions reach 5,000
18 central and commercial banks participated in the study, which covered 5,000 simulated transactions conducted over a 12-week period. Among the participating banks were international players such as HSBC, Standard Chartered, and NatWest, as well as central banks like the Deutsche Bundesbank and the Monetary Authority of Singapore.
In a comment, Tom Zschach, Swift’s Chief Innovation Officer, said the study has demonstrated that Swift can keep on playing a key role in a financial ecosystem where traditional currencies and CBDCs coexist.
“Our API-based CBDC connector has been confirmed to be strong across nearly 5,000 transactions between two different blockchain networks and traditional fiat currency, and we’re pleased to have the support of our community in developing it further,” he said.
BIS also announces successful CBDC pilot
The results of Swift’s study come shortly after the Bank for International Settlements (BIS), sometimes referred to as ‘the central bank of central banks’, released the results of its own trial for the utilization of CBDCs in cross-border transactions.
According to the BIS study, it is possible for central banks to have “almost full autonomy” over the design of their own CBDC, while still making the CBDC interoperable with other countries’ CBDCs for cross-border transactions.
