The SWIFT network has teamed up with a few central banks for its CBDC interoperability project, which is in its beta phase.
A new event has emerged in the SWIFT network days after it published its opinions on blockchain integration and interoperability. The international payment network has now announced the progress of its CBDC interoperability project. Central bank digital currencies (CBDCs) are currently under exploration by central banks worldwide.
According to its press release, central banks and monetary authorities have joined the project. Currently in its beta phase, the project saw the Central Bank of Kazakhstan, the Hong Kong Monetary Authority, and others participating in it.
Meanwhile, the sandbox experiments have seen thirty financial institutions worldwide taking part in exploring CBDC use cases. These CBDC use cases include foreign exchange models and liquidity-saving mechanisms. Participants in the sandbox include the Bank of Australia, Bank of Thailand, and HKMA, among others.
The SWIFT network had commenced its CBDC testing earlier in March. The phase had turned out successful, and multiple industry leaders had taken part in it.
The Chief Innovation Officer of SWIFT, Tom Zschach, said, “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.”
He also said the next phase of testing would confirm the project’s scale and efficiency. With over a hundred countries exploring CBDCs, faster transactions and cross-border transfers would soon be a reality. The SWIFT network has implied the importance of its infrastructure in driving CBDC payments.
Central banks have further explored CBDC use cases in the last few days. Project Sela, a retail CBDC system, was successfully tested by authorities from Israel, Hong Kong, and the BIS. For wholesale CBDCs, the recent G20 Chair India had called for expanding their usage.
Central banks in Europe are also ahead in the CBDC race. The region’s CBDC, called the digital euro, has received support from the EU countries. The Bank of Spain was in the news recently for deliberating on the advantages of the digital euro. The CBDC is scheduled for a 2023 launch.
The G20’s declaration document also mentioned CBDC’s usefulness in the international financial system and cross-border payments. It could be a testament to global powers in the world rooting for CBDCs and a common framework for their operations.
The United States Congress saw heated debates recently on the issue of CBDCs. CBDC opposition is still prominent among lawmakers, for which the country has seen slow progress for a digital currency. Meanwhile, regions in Europe and Asia have emerged as bright hotspots for CBDCs and crypto as a whole.