SWIFT Planning Launch of new CBDC Platform Within two Years
SWIFT, the global bank messaging network is planning to launch a new platform in the next one to two years to connect the rise of central bank digital currencies (CBDCs) being developed and launched in the global financial market.
Per Reuters, SWIFT’s new platform will create a network of CBDC platforms, marking one of the most significant steps in the burgeoning CBDC ecosystem.
It is expected that SWIFT’s network will launch as and when the first major CBDC currencies are released to the market.
SWIFT: Facilitating the rise of CBDCs
Today, close to 90% of the world’s central banks are exploring releasing digital versions of their currencies – the need to do so arising from the growing popularity of cryptocurrencies such as Bitcoin.
Indeed, Bitcoin has recently surpassed its all-time valuation record of US$69,000, and FinTech Magazine reported on its marked resurgence at the end of February 2024.
While many leading central banks don’t want to be left behind by blockchain-based payment technologies such as cryptocurrencies, there are complexities to bringing CBDCs to market.
One issue that remains is how a global standard will be defined, with CBDCs set to roll out in markets across the globe, from the US to Japan.
However, once these issues have been overcome, SWIFT plans to be ready to integrate independent CBDCs into a wider ecosystem.
Last year, we reported predictions from the Bank of International Settlements (BIS), which expects to see 15 retail and 9 wholesale CBDCs in circulation by 2030.
SWIFT’s Head of Innovation, Nick Kerigan, said to Reuters the network’s trial to launch a CBDC network took 6 months and involved a 38-member group of central banks, settlement platforms and commercial banks.
The push to create SWIFT’s CBDC network represents one of the largest collaborations on tokenised assets to date.
In theory, the SWIFT platform aims to ensure the interoperability of different countries’ CBDCs – even if they are built on underlying technologies – thus reducing payments system fragmentation risks.
Kerrigan adds: "We are looking at a roadmap to productize (launch as a product) in the next 12-24 months.
"It's moving out of the experimental stage towards something that is becoming a reality."
Being the first to launch a CBDC network would ensure SWIFT retains its position as the leading incumbent bank-to-bank plumbing network – as banking heads deeper into the digital age.
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