SWIFT begins preparing for centrally-controlled digital currencies

SWIFT, a platform that facilitates cross-border payments, has announced that it has begun testing cross-border payments using central bank digital currencies (CBDCs).

“We’re collaborating with @Capgemini to explore how SWIFT can interlink the multiple domestic-based #CBDC networks emerging worldwide to make cross-border payments with #DigitalCurrencies more seamless & frictionless,” the organization wrote on Twitter.

In an article announcing the move, SWIFT references a recent report by the Bank for International Settlements (BIS) that claimed that 90% of central banks around the world are working on CBDCs. SWIFT feels there is a need for a standardized system to enable the cross-border use of CBDCs.

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“Facilitating interoperability and interlinking between different CBDCs being developed around the world will be critical if we are to fully realize their potential,” said SWIFT’s Chief Innovation Officer Tom Zschach. “Today, the global CBDC ecosystem risks becoming fragmented with numerous central banks developing their own digital currencies based on different technologies, standards, and protocols.”

According to BIS, the number of central banks that have announced working on or considering CBDCs has doubled in 2022. 60% of the central banks surveyed are working on proofs-of-concept, while 26% are running pilot programs.

India is expected to launch a pilot by the end of the year, the EU’s Central Bank will begin testing a digital Euro in 2023, Mexico will launch its CBDC by 2025, and many other countries across the globe have similar plans.