• SWIFT has welcomed three additional central banks, including the Hong Kong Monetary Authority and the Central Bank of Kazakhstan, to its CBDC interoperability project’s beta phase.
• These central banks have successfully integrated their infrastructure with SWIFT’s “CBDC connector solution,” marking progress in CBDC development.

Earlier on Wednesday, September 13, SWIFT announced that three more central banks have entered the beta phase of its central bank digital currency (CBDC) interoperability project. Additionally, SWIFT has also been expanding its Sandbox testing program, which started earlier this year in March.

The central banks participating in SWIFT’s CBDC interoperability project for the first time include the Hong Kong Monetary Authority, the Central Bank of Kazakhstan, and an undisclosed central bank. These institutions have smoothly integrated their infrastructure with SWIFT’s “CBDC connector solution” and are now set to commence direct testing and collaboration.

This latest development follows the initial phase of sandbox testing, which featured an impressive lineup of over 18 participants. Over the course of 12 weeks, the sandbox facilitated more than 5,000 transactions, with notable entities including the Royal Bank of Canada, Société Générale, Banque de France, BNP Paribas, HSBC, Monetary Authority of Singapore, Deutsche Bundesbank, and NatWest. The program is set to surpass 30 leading institutions in number.

SWIFT’s Crucial Role In CBDC Interoperability

SWIFT has been actively steering ahead with developments in the interoperability of CBDCs as central banks have been working actively on these projects. SWIFT has undertaken several projects related to CBDCs. One notable initiative involves partnering with the New York Federal Reserve Bank on a wholesale CBDC project that leverages a regulated liability network. Although SWIFT’s traditional role in enabling bank-to-bank communication remains pivotal, the emergence of CBDCs raises the prospect of increased competition in this space.

In the realm of CBDCs, organizations like the Bank for International Settlements have initiated bridging projects, highlighting the potential for new technologies to disrupt established systems and foster innovation.

SWIFT’s network has demonstrated a remarkable increase in processing speed during its beta phase. In August, it achieved significant milestones in its core operations, proudly announcing that 89% of transactions were processed within one hour.

This achievement also surpassed the G20’s target of reaching 75% one-hour settlements by 2027. Furthermore, 84% of transactions on the SWIFT network were executed directly or involved a single intermediary. However, practical constraints, including regulatory controls, working hours, and batch processing, resulted in only 60% of wholesale payments being concluded within an hour.

SWIFT and Ripple

Along with SWIFT, other crypto market players like Ripple have been active in the CBDC game. Instead, of competing, blockchain players like SWIFT and Ripple have been working together to pave the way for SWIFT integration.

In a recent development, XRP Ledger (XRPL) has forged a strategic partnership with Gatehub to introduce amplified assets to its ecosystem. This signifies that XRPL will gain the capacity to effortlessly engage with established systems like SWIFT, Bitcoin, Ethereum, and more. This collaboration is poised to provide substantial support to Ripple and Stellar, positioning them favorably for increased adoption in the retail sector.