SWIFT is Experimenting with Central Bank Digital Currency: Another Step Towards the Future of Finance

SWIFT Testing Solution Connecting Central Bank Digital Currency

SWIFT (Society for Worldwide Interbank Financial Telecommunication) has published the results of the second phase of sandbox testing for its solution connecting Central Bank Digital Currency (CBDC), which has been named Interlink. The study included four use cases, not all related to CBDC, exploring the use of digital trade with atomic settlement using smart contracts.

Tokenization Platforms Facilitating Delivery versus Payment

As part of the experiment, tokenization platforms were used to facilitate delivery versus payment in an atomic manner. SWIFT collaborated with the financial infrastructure firm CLS Group to demonstrate the Interlink’s ability to connect existing foreign exchange infrastructures using CBDC. The project leveraged R3’s Corda technology and Hyperledger Fabric and Besu blockchains to showcase the interoperability of Interlink among them.

SWIFT’s Further Development Plan

SWIFT plans to continue developing the beta version of its Interlink, focusing on implementing smart contracts between networks, cryptographic token locking and releasing between networks, and network programmability of tokens. In the tests, over 125 users conducted 750 simulated transactions, presenting complex use cases for the SWIFT CBDC Interlink solution.

Test Participants and Next Steps

Among the participants in the second phase of the sandbox were ANZ, Citibank, Deutsche Bank, DTCC, HSBC, Société Générale, Standard Chartered, Sumitomo Mitsui, Shanghai Commercial & Savings Bank, and at least seven central banks or monetary institutions. SWIFT announced the start of testing in September. The first testing phase concluded in March 2023. Currently, SWIFT is seeking further use cases and experimenting with settlements using a single ledger model, similar to the CBDC sandbox.

Summary of SWIFT Experiment

SWIFT emphasizes the existence of traditional financial solutions and the need for interconnectivity. The second phase of sandbox testing brings a new perspective on the possibilities of implementing Central Bank Digital Currency in today’s financial world. The magazine “Step by Step: Blockchain Technology Transforms the Real Estate Market” will likely monitor SWIFT’s further development in the area of modern financial technologies.