SWIFT Plans To Interlink All CBDCs, Here’s Why

Anvesh Reddy
May 19, 2022 Updated October 3, 2024
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Even as central banks of various economies explore CBDCs, SWIFT is advancing cross-border payments involving digital currencies. While most of the central bank digital currency (CBDCs) focus on achieving digitalization of fiat currencies, SWIFT’s latest move aims at cross-border payments.

SWIFT is the global standard for payment and securities trade transactions. The new project, along with Capgemini, focuses on interlinking between various CBDCs being developed around the world.

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Interlinking Major CBDCs

Thomas Zschach, chief innovation officer, SWIFT, said,

“Today, the global CBDC ecosystem risks becoming fragmented with numerous central banks developing their own digital currencies based on different technologies, standards and protocols.”

In this regard, the SWIFT payments system collaborated with Capgemini for conducting new experiments to test the interlinking of domestic CBDCs, it announced.

Sudhir Pai, chief technology and innovation officer, Capgemini, said,

“Navigating decentralisation is complex with many technology choices, operating models, and policy considerations. Our well-defined taxonomy has helped us accelerate our efforts to build CBDC interlinks with SWIFT.”

In 2021, SWIFT conducted a CBDC experiment that successfully demonstrated cross-border transactions. The transfers were held between one entity on CBDC network and an real-time gross settlement (RTGS) system.

Also, certain central banks are building CBDCs using a centralised architecture, while others are using distributed ledger technology. The experiments focus on building and demonstrating the ability to deploy a gateway on a domestic CBDC network.

The gateway will intercept cross-border transactions on the network, translate them, and send them to the SWIFT platform. Accordingly, SWIFT handles the transmission to another CBDC network or an established payment system. In collaboration with Capgemini, SWIFT is trying to address three use cases – interlinking CBDC with CBDC, fiat with CBDC, and CBDC with fiat.

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Russia SWIFT Ban

The SWIFT payments network was recently in news over Russia’s removal from the system. After Russia started invading Ukraine in February, much was talked about on whether Moscow will adopt digital assets to bypass crippling economic sanctions.

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
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Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Anvesh reports major crypto updates around U.S. regulation and market moving trends. Published over 1400 articles so far on crypto and blockchain. A proud dropout of University of Massachusetts, Lowell. Can be reached at [email protected] or x.com/BitcoinReddy or linkedin.com/in/anveshreddybtc/
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.