SWIFT, the global bank messaging network, is making moves to ensure it remains at the forefront of cross-border payments as central bank digital currencies (CBDCs) emerge. The firm plans to launch a new platform within the next 1-2 years that will connect the rapidly developing CBDCs to existing financial infrastructure.
This strategic move would be one of the most significant developments yet for the nascent CBDC ecosystem, given SWIFT’s critical role in facilitating trillions of dollars worth of global bank transactions daily. The new platform’s timeline will likely be fine-tuned to align with the launch of the first major sovereign digital currencies.
Around 90% of the world’s central banks are currently exploring CBDCs – digital versions of their fiat currencies. While motivations vary, most are driven by a desire to keep pace with cryptocurrencies like bitcoin and avoid being left behind by innovations in digital money and payments.
According to Nick Kerigan, SWIFT’s head of innovation, the firm has just completed one of the largest global trials on CBDCs and “tokenized” assets to date. The 6-month trial involved 38 members including central banks, commercial banks, and settlement platforms.
“It focused on ensuring different countries’ CBDCs can all be used together even if built on different underlying technologies or protocols, thereby reducing payment system fragmentation risks,” Kerigan explained.
The trial also demonstrated that CBDCs could be seamlessly integrated into complex trade and foreign exchange transactions, potentially automating and accelerating processes while lowering costs. Importantly, it proved banks could utilize their existing infrastructure to access the new digital payment rails.
“The results were widely regarded as a success by those who took part and have given SWIFT a timeline to work towards productizing in the next 12-24 months,” Kerigan said. “It’s moving out of the experimental stage towards becoming a reality.”
While the launch timeline could still shift depending on major economy CBDC rollouts, an early mover advantage would bolster SWIFT’s dominance in cross-border bank messaging and payments.
Several countries like the Bahamas, Nigeria, Jamaica and China’s e-yuan pilot have already launched live CBDCs. The European Central Bank’s digital euro project is also well underway, as are multiple cross-border CBDC trials coordinated by the Bank for International Settlements.
However, SWIFT’s main strength is its unparalleled existing network which is used by over 11,500 banks and funds across more than 200 countries to facilitate trillions in daily flows.
“If we can plug in any number of networks into the SWIFT system, it becomes a much more scalable option for the industry,” noted Kerigan.
The latest CBDC trial featured heavyweights like the central banks of Germany, France, Australia and Singapore along with global banks such as HSBC, Citi, Deutsche and SocGen. Notably, at least two Chinese banks also participated.
Looking ahead, SWIFT sees immense potential beyond just CBDCs. Consulting firm BCG forecasts $16 trillion worth of assets could be “tokenized” into real-time tradable digital forms by 2030.
By bridging CBDCs and tokenized assets to its ubiquitous network, SWIFT is positioning itself as a connectivity backbone for the coming wave of digital money and assets reshaping global finance.
