SWIFT Advances with Second Stage of CBDC Interlinking Solution in Sandbox Tests
Summary:
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) completed the second stage of sandbox trials for its central bank digital currency (CBDC) interconnecting solution. Four use cases were evaluated and a single access point by SWIFT was found to lower participation costs, reuse existing channels, and link new networks. After the successful trials, SWIFT is planning to further refine its connector, concentrating on applying smart contracts, locking and releasing tokens cryptographically, and preserving the data and programmability of tokens across networks. More than 750 mock transactions were conducted by over 125 users, including major banks and financial institutions.
After releasing the second stage of sandbox trial results, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) has showcased its connectivity solution for central bank digital currencies (CBDCs). Out of the four tested scenarios, not all were connected to CBDCs, the report stated. The tests included atomic (immediate) settlement with digital trading through smart contracts, integrating tokenization platforms for atomic delivery versus payment setups, and partnering with CLS Group, a financial infrastructure organization, to demonstrate foreign exchange infrastructure links via this CBDC feature.
The fourth test, which reduced liquidity fragmentation using its Liquidity Saving Mechanism algorithms, was executed as a paper-based task with bilateral conversations. R3's Corda and the Hyperledger Fabric and Besu blockchains were used to show the connector’s effectiveness among various platforms.
The final conclusion stated: "A single access point provided by Swift can help institutions reuse their current channels, access new networks, and reduce the cost of participation." The global financial network also emphasized the ongoing existence and need for traditional financial solutions to connect.
In the next phase, SWIFT is set on expanding the beta version of its connector, focusing on the execution of smart contracts across networks, secure token locking and release across ecosystems, as well as data safety and token programmability across networks.
Over 125 users conducted over 750 simulated transactions to test different applications of the SWIFT CBDC interlinking proposal. Notable participants included ANZ, Citibank, Deutsche Bank, DTCC, HSBC, Société Générale, Standard Chartered, Sumitomo Mitsui and Shanghai Commercial & Savings Bank, along with at least seven central banks or financial authorities.
The trial processes were initiated in September and the first phase was successfully concluded in March 2023. Alongside the CBDC sandbox tests, SWIFT has also been exploring the possible uses of a unified ledger model for settlement purposes, underscoring the utility of existing technology, including SWIFT's own.
Published At
3/26/2024 12:53:42 AM
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