Swift Reports Positive Results from CBDC Pilot Test, Continues with Next Phase of Testing

cryptonews.com:

The international payment system Swift has reported positive results from a pilot test of transfers between different central bank digital currencies (CBDCs), saying they see “clear potential and value” in it.

The pilot test specifically looked at how different CBDCs can interoperate through an API-based CBDC connector, using two different blockchain networks and existing fiat-based payment systems.

According to a press release issued by Swift, all participants in the pilot expressed “strong support” for the continued development of the solution. The participants also agreed that the CBDC connector used in the simulations enabled “seamless exchange of CBDCs,” and said this was also true for transfers between CBDCs built on different platforms.

The latter is seen as key, given the risk of fragmentation as central banks around the world all build their own CBDCs.

Following the conclusion of the pilot test, Swift will now develop a beta version of the system for further testing by central banks. After that, a second phase of sandbox testing will be held for participants to explore new use cases, including in securities settlement, trade finance, and conditional payments, Swift said in the press release.

18 central and commercial banks participated in the study, which covered 5,000 simulated transactions carried out over a 12-week period. Among the participating banks were large international players like HSBC, Standard Chartered, and NatWest, as well as central banks like the Deutsche Bundesbank and the Monetary Authority of Singapore.

In a comment, Tom Zschach, Swift’s Chief Innovation Officer, said the study has shown that Swift can continue to play a critical role in a financial ecosystem where traditional currencies and CBDCs