SWIFT Plans Launch Of Platform Connecting Central Bank Digital Currencies With Global Banking System

SWIFT, the global bank messaging network, has announced plans to launch a new platform within the next one to two years. This platform will connect the emerging central bank digital currencies (CBDCs) with the existing financial system.

What Happened: SWIFT’s head of innovation, Nick Kerigan, revealed that the new platform will be designed to coincide with the launch of the first major CBDCs. Reuters reported that this move is expected to be a game-changer for the evolving CBDC ecosystem, given SWIFT’s crucial role in global banking.

“We are looking at a roadmap to productize (launch as a product) in the next 12-24 months,” Kerigan said in an interview. “It’s moving out of experimental stage towards something that is becoming a reality.”

Around 90% of the world’s central banks are exploring digital versions of their currencies. While they aim to keep up with cryptocurrencies like Bitcoin BTC/USD, they face technological challenges.

SWIFT’s recent six-month trial, involving 38 central banks, commercial banks, and settlement platforms, focused on ensuring that different countries’ CBDCs can be used together, even if they are built on different underlying technologies.

The trial also demonstrated the potential for these digital currencies to be used in complex trade or foreign exchange payments and potentially be automated to speed up and reduce costs.

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Kerigan stated that the trial results showed that banks could use their existing infrastructure, which was widely regarded as successful. This has provided SWIFT with a timeline for working towards the new platform.

Why It Matters: SWIFT’s announcement comes as the global financial landscape is witnessing a significant shift towards digital currencies. This move by SWIFT is expected to profoundly impact the future of CBDCs and the global financial system.

Earlier in 2023, Deutsche Bank and Standard Chartered Bank successfully conducted a Universal Digital Payments Network (UDPN) proof-of-concept, facilitating real-time transactions between USD Coin and EURS stablecoins. This development was seen as a major step towards adopting digital currencies in the global financial system.

However, former President Donald Trump has been vocal about his opposition to CBDCs, calling them “dangerous” and a threat to freedom. Despite this, the global momentum towards digital currencies seems to be unstoppable, with SWIFT’s latest move further solidifying this trend.

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