SWIFT is the messaging and interbank payment protocol. Capgemini, an international services company, has been partnered by SWIFT to carry out a series experiments in order to make sure that new CBDCs can perform cross-border payments, and have remittance capabilities.
SWIFT to Modernize Connection Systems
SWIFT is the interconnection protocol for bank and payments. It plans to offer its services to central banks’ digital currencies. This member-owned cooperative announced that it has already begun experiments using decentralized platforms in order to make sure cross-border payments and remittances are available for those who use these currencies.
The interconnection of the new currency type will play a crucial role in SWIFT’s success. There are not that many CBDCs in existence right now, but nine of ten central bank reports indicate there is interest.
Nick Kerigan from SWIFT’s Head of Innovation, commented on the significance of interconnection.
Different CBDCs and systems will have to work in harmony or businesses and consumers will be restricted from making frictionless cross-border payments with CBDCs.
CBDC Experiments
In partnership with Capgemini (a digital service company), SWIFT has been conducting experiments to see if these currencies can be used to exchange between systems that are not specifically designed for such purposes.
While the inner workings of the system in place have not been explained to the public, SWIFT clarifies that part of the already existent payments infrastructure is being reused, including existing bank messaging standards and authentication models, ISO 20022, and SWIFT’s private key infrastructure.
It has been shown that it’s possible to meet the stated goals through experiments using several decentralized ledger platform such as Corda or Quorum. In a transitional phase, CBDCs can coexist with fiat currencies that use SWIFT system in order to achieve total digitization.
SWIFT hinted that other types of crypto assets could be included in the network as soon as they are regulated globally.
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