CBDC Pilots Now Being Tested by Three Central Banks, According to SWIFT

Three central banks have launched new pilots for central bank digital currencies (CBDCs), according to an announcement from the Society for Worldwide Interbank Financial Telecommunication (SWIFT).

In a new announcement, SWIFT says it has entered a new phase of work on CBDC interoperability, and that a trio of central banks are beta-testing new systems for interlinking CBDCs with 30 financial institutions exploring further use cases.

SWIFT says that the Hong Kong Monetary Authority (HKMA) and the National Bank of Kazakhstan have begun integrating the new solution with their own infrastructure for direct testing. The third central bank was left unnamed by SWIFT in the announcement.

Says Tom Zschach, Chief Innovation Officer at SWIFT,

“Our focus is on interoperability – ensuring that new digital currencies can seamlessly coexist with each other and with today’s fiat-based currencies and payment systems. The financial community has already recognised the strong potential of our CBDC innovations for preventing digital islands while securely bridging the payment systems of today and the future. This next phase of testing and exploration will help us further refine the solution to ensure it is as effective as possible, and at scale.”

SWIFT says that since there will be so many different CBDCs, with nearly 130 countries actively exploring the technology, there may be fragmentation issues when they come to fruition in the future. SWIFT says the potential issue makes interoperability solutions a top priority for the organization.

According to SWIFT, its new “connector” tech has already enabled seamless transactions between different blockchain-based CBDC systems that were built on completely different frameworks.

“SWIFT, to counter this fragmentation, has prioritized focus within its innovation agenda on interoperability for digital currencies and tokenized assets to enable them to seamlessly scale if and when they are deployed into the financial ecosystem.

Its specific work on CBDCs began more than 18 months ago and, in the first phase of its experiments and sandbox testing, almost 5,000 transactions were simulated between two different blockchain networks and with existing fiat-based payment systems. Central and commercial bank participants noted that the connector enabled the seamless exchange of CBDCs, even for those built on different platforms.”

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