International payment system SWIFT has reported positive results of a pilot Examination Transfers between different central bank digital currencies (cbdcs), saying that they see “clear potential and value” in it.
The pilot test specifically looked at how different CBDCs using two different blockchain networks and existing fiat-based payment systems could interoperate through an API-based CBDC connector.
according to a Press release Released by Swift, all participants in the pilot expressed “strong support” for the continued development of the solution. Participants also agreed that the CBDC connector used in the simulation enables “seamless exchange of CBDCs,” adding that the same is true for transfers between CBDCs built on different platforms.
The latter is considered important given the risk of fragmentation as central banks around the world create their own CBDCs.
Following the conclusion of the pilot test, SWIFT will now develop a beta version of the system for further testing by central banks. After that, a second phase of sandbox testing will be conducted to explore new use cases for participants, including securities settlement, trade finance and conditional payments, Swift said in the press release.
5,000 simulated transactions
18 central and commercial banks participated in the study, which included 5,000 simulated transactions conducted over a 12-week period. Participating banks included large international players such as HSBC, Standard Chartered and NatWest, as well as central banks such as Deutsche Bundesbank and the Monetary Authority of Singapore.
In a comment, Swift’s Chief Innovation Officer, Tom Zschach, said the study showed SWIFT could play an important role in a financial ecosystem where traditional currencies and CBDCs co-exist.
“Our API-based CBDC connector has been proven robust with nearly 5,000 transactions between two different blockchain networks and traditional fiat currencies, and we are excited to have the support of our community in developing it further,” he said.
BIS also reports successful CBDC test
The results of SWIFT’s study come a few days after the Bank for International Settlements (BIS).bis), sometimes called the ‘central bank of central banks’, released the results of its own pilot study for Use of CBDC in cross border transactions,
According to the BIS study, it should be possible for central banks to have “almost complete autonomy” over the design of their own CBDCs, while still making CBDCs interoperable with other countries’ CBDCs for cross-border transactions.