SWIFT plans new platform to connect central bank digital currencies

SWIFT, the global bank messaging network, is embarking on a groundbreaking initiative to launch a new platform within the next 1-2 years. This platform aims to connect the surge of central bank digital currencies (CBDCs) currently in development to the network’s existing financial system.

This move, expected to be a major milestone for the upcoming CBDC ecosystem, underscores SWIFT’s pivotal role in global banking and its commitment to innovation.

Approximately 90 percent of the world’s central banks are exploring digital versions of their currencies. Therefore, SWIFT’s new platform will address the technological complexities they are facing with CBDC adoption. SWIFT has succeeded in its recent 6-month trial involving 38 central banks, commercial banks and settlement platforms.

These trials focused on ensuring adaptability among different countries’ CBDCs and reducing payment system fragmentation risks.

Moreover, the trials revealed that SWIFT’s new platform could handle complex trade or foreign exchange payments. It can also potentially automate this process to ensure speed and cost efficiency.

The positive outcomes of these trials have paved the way for SWIFT to accelerate the development of its new platform. The company indicated that it’s transitioning from the experimental stage to productization.

It plans to launch the platform within the next 12-24 months. While the timeframe is subject to potential adjustments based on CBDC launch schedules, SWIFT aims to capitalize on the momentum surrounding CBDC adoption.

Hence, SWIFT’s existing network which spans over 200 countries and connects more than 11,500 banks and funds, positions it as a major player in the global banking landscape.

The participation of heavyweight commercial banks and central banks from various countries underscores the collaborative nature of SWIFT’s new platform. By providing a centralized global connection point for digital asset payments, SWIFT aims to streamline processes and enhance scalability for the industry.

Additionally, SWIFT recognizes the potential for tokenization of assets, with projections suggesting a significant market opportunity by 2030. Hence, a forecast from Boston Consulting Group reveals that by 2030, around $16 trillion worth of assets could be tokenized.

Tokenization involves the process of transforming assets like stocks and bonds into digital chips that can then be issued and traded in real time.