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James Carter

March 12, 2023

Breaking news: Swift Reports Positive Results from CBDC Pilot Test

The international payment system Swift has reported favorable results from a pilot test of transfers across various central bank digital currencies (CBDCs), stating that they see “clear potential and value” in it. The test was conducted to determine whether or not such transactions are possible.

Swift Reports Positive Results from CBDC Pilot Test

During the pilot test, the specific goal was to investigate how various CBDCs can interact with one another by utilizing an API-based CBDC connector, two distinct blockchain networks, and preexisting payment systems that are based on fiat currency.

Swift has stated in a news statement that all of the participants in the pilot have provided “strong support” for the company’s decision to carry on with the development of the solution. The participants also reached the conclusion that the CBDC connection that was employed in the simulations allowed for a “seamless exchange of CBDCs,” and they stated that this was equally true for transfers between CBDCs that were constructed on different platforms.

This last point is considered crucial in light of the fact that central banks all over the world are currently working on developing their own CBDCs.

Swift will now construct a beta version of the system after the conclusion of the pilot test. This version of the system will undergo additional testing by central banks. According to Swift’s news release, after that, there will be a second phase of sandbox testing performed for participants to investigate new use cases. Some of these new use cases include conditional payments, trade finance, and the settlement of securities.

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5,000 simulated transactions

Within the scope of the study, which spanned a period of twelve weeks and included 5,000 simulated transactions, there were eighteen commercial and central banks that took part. Large multinational financial institutions such as HSBC, Standard Chartered, and NatWest were among the participating banks. Other financial institutions that took part included central banks such as the Deutsche Bundesbank and the Monetary Authority of Singapore.

Swift Reports Positive Results from CBDC Pilot Test

According to Tom Zschach, Chief Innovation Officer for Swift, the study demonstrated that Swift could continue to play a crucial role in a financial ecosystem where traditional currencies and CBDCs co-exist. Zschach made this comment in response to a question about the study.

“Our API-based CBDC connector has been proven to be robust across almost 5,000 transactions between two different blockchain networks and traditional fiat currency, and we’re delighted to have the support of our community in further developing it,” he added. “Our API-based CBDC connector has been proven to be robust across almost 5,000 transactions between two different blockchain networks and traditional fiat currency.”

BIS also reports successful CBDC test

The findings of Swift’s research were made public just a few days after the Bank for International Settlements (BIS), also known as “the central bank of central banks,” made public the findings of its own pilot study regarding the utilization of CBDCs in international financial dealings.

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According to the findings of the study conducted by the BIS, it is conceivable for central banks to have “almost full autonomy” over the design of their own CBDC while also ensuring that the CBDC is interoperable with the CBDCs of other nations for the purpose of conducting international transactions.

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