SWIFT To Introduce New Central Bank Digital Currency Platform Within 12-24 Months

SWIFT, the global bank messaging network, has revealed plans to introduce a new platform within the next one to two years. This platform aims to link the emerging wave of central bank digital currencies (CBDCs) to the existing financial system. This move, considered one of the most significant developments for the nascent CBDC ecosystem, acknowledges SWIFT's crucial role in global banking.

Around 90 per cent of the world's central banks are currently exploring digital versions of their currencies, driven partly by the rise of cryptocurrencies like bitcoin. However, they face technological challenges in implementing these digital currencies.

SWIFT's head of innovation, Nick Kerigan, highlighted the success of its recent trial involving a 38-member group of central banks, commercial banks and settlement platforms. This trial focused on ensuring interoperability among different countries' CBDCs, reducing payment system fragmentation risks.

The trial also demonstrated the potential for CBDCs to streamline complex trade or foreign exchange payments, potentially automating processes to enhance speed and reduce costs.

Kerigan stated that based on the positive results of the trial, SWIFT is aiming to launch a product within the next 12-24 months, moving from experimentation to implementation.

While the timeline may be subject to adjustments based on CBDC launch delays, SWIFT aims to maintain its dominance in the bank-to-bank network by aligning with the emergence of CBDCs.

Several countries, including the Bahamas, Nigeria, Jamaica and China, have already launched or are trialing CBDCs. SWIFT's advantage lies in its extensive network spanning over 200 countries and connecting more than 11,500 banks and funds.

The recent trial involved participation from central banks and major commercial banks worldwide, demonstrating widespread interest in SWIFT's initiative. The aim is to provide a scalable solution for digital asset payments, consolidating numerous connections into a single global point.

Additionally, SWIFT sees potential in tokenisation, with forecasts suggesting a significant increase in tokenized assets by 2030. This process involves transforming assets like stocks and bonds into digital tokens for real-time trading.

Overall, SWIFT's initiative signals a significant step towards integrating CBDCs into the global financial system, potentially revolutionising the way digital assets are transacted and traded.