Hong Kong and Kazakhstan beta-testing Swift’s CBDC solution

Rick Steves

“The financial community has already recognized the strong potential of our CBDC innovations for preventing digital islands while securely bridging the payment systems of today and the future.”

Swift is making significant strides in the realm of Central Bank Digital Currencies (CBDCs) by advancing its innovative solution for CBDC interoperability.

The company has revealed that three central banks are currently beta-testing this groundbreaking solution, while an expanded group of over 30 financial institutions is participating in sandbox experiments aimed at exploring further use cases.

2nd sandbox include RBA, Bundesbank, HKMA, Bank of Thailand, and CLS

Swift’s commitment to CBDC interoperability was reinforced after the initial success of sandbox testing, during which participants recognized the clear potential and value of the solution. Now, the beta version of Swift’s CBDC connector solution is being integrated with the infrastructure of three central banks and monetary authorities, including the Hong Kong Monetary Authority (HKMA) and the National Bank of Kazakhstan, for direct testing.

In addition to the beta testing, Swift has initiated a second phase of sandbox experiments involving commercial banks, central banks, and financial market infrastructures. In this phase, participants are exploring various use cases, including trigger-based payments for digital trade platforms, foreign exchange models, delivery vs. payment mechanisms, and liquidity-saving techniques.

Notable institutions such as the Reserve Bank of Australia, Deutsche Bundesbank, HKMA, Bank of Thailand, and CLS are among the more than 30 leading entities participating in this expanded sandbox phase.

New digital currencies must coexist with each other and fiat currencies

Swift highlighted the importance of ensuring that new digital currencies can seamlessly coexist with each other and with existing fiat-based currencies and payment systems.

Tom Zschach, Chief Innovation Officer at Swift, said: “The financial community has already recognized the strong potential of our CBDC innovations for preventing digital islands while securely bridging the payment systems of today and the future.”

According to The Atlantic Council, CBDC exploration is on the rise, with 130 countries, representing 98% of global GDP, actively exploring CBDCs. In fact, 19 of the G20 countries are in advanced stages of CBDC development, with nine already in pilot phases. However, this proliferation of CBDC initiatives raises the possibility of a fragmented landscape across borders as countries primarily focus on domestic usage.

Swift, recognizing the potential challenges of fragmentation, has placed a strong emphasis on interoperability within its innovation agenda. The company’s work on CBDCs began over 18 months ago, and the initial phase of sandbox testing simulated nearly 5,000 transactions between different blockchain networks and existing fiat-based payment systems. Participants from central and commercial banks noted that Swift’s connector allowed for the seamless exchange of CBDCs, even when they were built on different platforms.

Read this next

Digital Assets

Binance tames up with Japan’s biggest lender to launch stablecoins

Binance Japan is planning to launch stablecoins denominated in the dollar, euro, and yen in Japan in 2024. The crypto exchange aims to introduce these tokens, and possibly more, through its partnership with Mitsubishi UFJ Financial Group’s trust banking arm.

Institutional FX

Spot FX volumes drop +10% at CLS in August 2023

Total daily traded volume submitted to CLS for settlement took a step back in August as the summer typical lull hit market activity. The metrics showed a weak performance in the group’s FX business as the Q3 got off to a calm end while no fresh events were able to whip up a market frenzy.

Digital Assets

Veteran iGaming Team Launch Crypto Casino Portal

CryptoCasinos.Casino launches as a premier destination for crypto gambling aficionados, offering in-depth reviews, comparisons, and resources to navigate the burgeoning world of cryptocurrency-based casinos seamlessly.

Digital Assets

Xsolla Announces Acquisition of AcceleratXR, A Multi-Player Platform For Games

Xsolla enhances its gaming tech suite with the acquisition of AcceleratXR, bolstering cross-platform game development and pioneering advancements in cross-play experiences for players worldwide.

Digital Assets

OKX’s PoR report shows no solvency concerns, assets worth $11.2 billion

Cryptocurrency exchange OKX has released its 11th consecutive proof-of-reserves report amid increasing demand of crypto investors asking for transparency from exchanges they trade with.

Digital Assets

Horizen Launches Decentralized Governance with Introduction of Horizen DAO

Horizen inaugurates a novel decentralized autonomous organization, inviting broader community participation and heralding a new chapter in blockchain governance.

Digital Assets

Binance France induces users to convert their fiat into crypto

Following the expiration of its partnership with Paysafe, Binance France urged its customers to convert their fiat currency holdings on the platform into cryptocurrencies.

Industry News

Exness Crowned as Best Global Multi-asset Broker at Forex Expo Dubai 2023

Cyprus-based Exness garners top honors at the Forex Expo Dubai, solidifying its esteemed position in the global financial arena.

Retail FX

CySEC cancels license of 101investing parent following €200,000 fine

The Cyprus Securities and Exchange Commission (CySEC) confirmed on Tuesday that it has wholly withdrawn the Cyprus Investment Firm (CIF) License of FX retail brokerage firm FXBFI Broker Financial Invest Ltd, trading as 101investing.