- SWIFT’s Central Bank Digital Currency (CBDC) project welcomes three new central banks and extends its sandbox testing phase.
- SWIFT’s network processing speed sees a remarkable rise, with 89% of transactions completed within an hour.
Taking the lead into SWIFT’s CBDC project are the Hong Kong Monetary Authority, the Central Bank of Kazakhstan, and a third unnamed central bank. These financial institutions have flawlessly merged their infrastructure with SWIFT’s specialized “CBDC connector solution”, and are geared up to initiate direct tests and further collaborative efforts.
This step is a continuation of the primary sandbox testing phase that previously showcased a noteworthy roster of over 18 participants. Some of the standout members from this ensemble include the Royal Bank of Canada, Société Générale, Monetary Authority of Singapore, HSBC, and Deutsche Bundesbank. Over a span of 12 weeks, this sandbox environment witnessed the execution of more than 5,000 transactions, with the program’s participant count slated to exceed 30 prominent institutions.
The Evolution of SWIFT’s Role in CBDCs
As SWIFT embarks on its journey into the CBDC sphere, it has undertaken various innovative projects. A notable venture includes a collaboration with the New York Federal Reserve Bank on a wholesale CBDC initiative that harnesses a regulated liability network. Though SWIFT’s conventional function of enabling interbank communication is undeniably vital, the emergence of CBDCs hints at potential contenders in the market.
Organizations like the Bank for International Settlements have also ventured into CBDC bridging endeavors. This move underscores the capacity of new technological advancements to challenge legacy systems and promote creative breakthroughs.
SWIFT’s Notable Achievements in Processing Speed
A pivotal revelation in SWIFT’s recent activities is the significant acceleration in its network’s processing speed during the beta phase. The banking consortium proudly unveiled that, in August, its network managed to process a staggering 89% of transactions within a mere 60-minute window.
This accomplishment overshadows the G20’s objective of realizing 75% of settlements within an hour by 2027. Moreover, 84% of the operations on the SWIFT system were either directly executed or involved a singular intermediary. However, it’s crucial to highlight that only 60% of wholesale payments were finalized within this duration. The variance in actual execution times can be attributed to aspects such as regulatory constraints, operational hours, and batch processing methods.
In a recent development spotlighted by our view on the AMB Crypto report, these advancements and progressions demonstrate SWIFT’s commitment to evolving in the digital financial landscape.
