SWIFT planning launch of new central bank digital currency platform in 12-24 months

LONDON, March 25 (Reuters) – SWIFT, the global bank messaging network, has informed Reuters that it plans to develop a new platform within the next one to two years to facilitate the integration of emerging central bank digital currencies (CBDCs) with the existing financial infrastructure. This initiative, expected to be a significant step forward for the evolving CBDC ecosystem, acknowledges SWIFT’s pivotal role in global banking and will likely align with the launch of major CBDCs.

With approximately 90% of the world’s central banks exploring digital currency initiatives, there’s a growing urgency to adapt to the evolving landscape shaped by cryptocurrencies like bitcoin. However, the technical complexities involved pose challenges for these institutions.
SWIFT’s head of innovation, Nick Kerigan, highlighted the success of their recent trial, which engaged a diverse group comprising central banks, commercial banks, and settlement platforms over a six-month period. This trial, one of the largest global collaborations on CBDCs and tokenized assets to date, focused on interoperability among different CBDCs, aiming to mitigate risks associated with payment system fragmentation.

The trial demonstrated the feasibility of utilizing existing infrastructure for CBDC transactions and showcased the potential for streamlining complex trade and foreign exchange payments while reducing associated costs. Kerigan emphasized the positive reception of the trial results and outlined a timeline for product development.
“We are looking at a roadmap to productize (launch as a product) in the next 12-24 months,” Kerigan stated in an interview, indicating a transition from experimental phases to tangible implementations.

Despite potential shifts in the timeline due to delays in major economy CBDC launches, SWIFT aims to maintain its position as a dominant player in bank-to-bank transactions, leveraging its extensive global network spanning over 200 countries and connecting more than 11,500 banks and funds.

The envisioned scalable solution would serve as a centralized global connection point for digital asset payments, simplifying the process for banks compared to establishing individual connections with numerous counterparts. Moreover, SWIFT’s initiative aligns with broader trends towards asset tokenization, as forecasted by Boston Consulting Group (BCG), which predicts around $16 trillion worth of assets to be tokenized by 2030.

While acknowledging the potential for disruptive actions similar to the 2022 sanctions on Russian banks, SWIFT remains optimistic about the adoption of the new CBDC system, backed by participation from various central banks and commercial institutions across the globe.