SWIFT Prepares to Launch CBDC Connectivity Platform

Global financial messaging standard operator SWIFT, which connects private banks worldwide, is venturing into the central bank digital currency (CBDC) business. The Belgium-based consortium unveiled plans to launch a CBDC platform that will bridge various national digital currencies and the existing financial system. SWIFT's move follows a six-month experiment aimed at establishing the solution's feasibility. The pilot was deemed a success and involved 38 financial institutions, including central banks, commercial banks, and other players.

SWIFT Embarks on CBDC Connectivity Platform Launch

Brussels, Belgium – The Society for Worldwide Interbank Financial Telecommunication (SWIFT), the operator of the de facto messaging network connecting financial institutions globally, is venturing into the central bank digital currency (CBDC) settlement business.

The Belgium-based cooperative has announced plans to launch a CBDC platform that will bridge different national digital currencies with the existing financial infrastructure.

SWIFT's decision follows a six-month proof-of-concept trial to determine the viability of such a solution. The pilot was deemed successful, involving 38 financial institutions, including central banks, commercial banks, and other participants.

Speaking to Reuters, SWIFT's Head of Innovation, Nick Kerigan, provided an indicative timeline for the connectivity network's rollout. "We are looking at a production [product launch] timeline for the next 12 to 24 months," he said in an interview with Reuters. "It's moving from an experiment to something that's going to become real."

While approximately 90% of central banks worldwide are exploring the possibility of issuing a digital version of their currency, only a handful have advanced to production.

The Bahamas, Nigeria, and Jamaica have launched their CBDCs, while China has an advanced pilot program underway.

SWIFT's move, however, could establish the rails for a centralized CBDC ecosystem even after such currencies are issued, seeking to capture the space ahead of potential competitors.

This is feasible because SWIFT's interlinking systems are agnostic to the architecture of the individual digital currencies they will handle.

Other platforms seeking to aggregate CBDCs and facilitate transactions and settlements among them are also in development.

Project mBridge, a platform connecting digital currencies of the United Arab Emirates, China, Hong Kong, and Thailand, achieved a milestone in January, facilitating the first cross-border digital dirham payment.

By connecting CBDCs from various jurisdictions on a single network, SWIFT and other similar platforms aim to streamline cross-border payments, enhance transparency, and reduce the need for intermediaries.

Industry experts believe that CBDCs may coexist with other forms of digital currency, such as stablecoins and cryptocurrencies, but the regulatory landscape and technical interoperability challenges need to be addressed for widespread adoption.