On Monday local time, the World Bank Financial Telecommunication Association (SWIFT) announced the results of the second phase sandbox testing of the central bank's digital currency interconnection solution. In addition to the testing itself, the capital market is also excited about its vision of launching the "Central Bank Digital Currency Interconnection Platform" in the near future.
(Source: SWIFT)
Expected to launch a global CDBC internet platform
As the world's main international payment communication channel, SWIFT connects tens of thousands of financial institutions in over 200 countries/regions, and is also the most important financial infrastructure for cross-border trade. But as 90% of global central banks join the exploration of digital currencies, SWIFT naturally wants to maintain its leading position in the context of new technologies emerging.
For the just completed sandbox experiment, Nick Kerigan, the innovation director of SWIFT, stated that the latest experiment lasted for 6 months, and dozens of central banks, large commercial banks, and settlement platforms around the world conducted a series of tests. This is also the largest global cooperation on central bank digital currencies and "tokenized" assets to date. Including the central banks of Germany, France, Singapore, as well as international financial institutions such as HSBC, Deutsche Bank, Citigroup, Standard Chartered, and CLS Group.
This test also shows that even if digital currencies from different countries/regions are built on different underlying technologies (or "protocols"), they can still be used together on the same internet platform. Meanwhile, these digital currencies can also be used for highly complex foreign exchange/trade payments and may reduce process costs through automation.
According to SWIFT, due to the use of different technologies, standards, and protocols, many central banks are exploring their own central bank digital currencies and other forms of tokenized assets, which also pose a risk of fragmentation.
Kerigan also mentioned that SWIFT is considering launching this interconnected platform as a product in the next 12-24 months, as the platform is "transitioning from the experimental stage to the gradually becoming a reality stage.".
Sanctions remain an unavoidable topic
Although the main theme of Monday's SWIFT was about cryptocurrency interconnection platforms, it still cannot escape the topic of sanctions. In fact, the latest understanding of SWIFT by most people on Earth is likely to come from the fact that many Russian banks have had their trading channels cut off from the outside world in 2022.
The latest sanctions against Russia released by the US Treasury Department on Monday also happen to be related to digital currencies. Several fintech companies from Russia, as well as a virtual currency exchange located in the United Arab Emirates, have been accused by the US of "participating in, supporting, or operating blockchain networks that may help Russia evade financial sanctions.".
Kerigan also bluntly stated that "there is still a possibility of speaking out in the new CDBC interconnection system in the future" regarding this "Western countries waving their sanctions baton," but he does not believe that this situation will prevent countries/regions from joining such a platform.
