Swift, the interbank co-operative, is collaborating with three central banks and 30 financial institutions to conduct beta tests of an innovative approach to connect central bank digital currencies (CBDCs) with existing fiat infrastructures.
In March, Swift shared the outcomes of a 12-week sandbox testing phase, during which nearly 5,000 transactions were simulated between two distinct blockchain networks and traditional fiat-based payment systems.
The beta solution has now progressed to its next stage, with three central banks and monetary authorities, including the Hong Kong Monetary Authority (HKMA) and the National Bank of Kazakhstan, integrating the solution into their infrastructure for direct testing.
Swift has also launched a second phase of sandbox testing, involving commercial banks, central banks, and financial market infrastructures. This phase explores various additional use cases, including trigger-based payments for digital trade platforms, foreign exchange models, delivery versus payment, and liquidity-saving mechanisms. Notable institutions in this expanded group of more than 30 participants include the Reserve Bank of Australia, Deutsche Bundesbank, HKMA, Bank of Thailand, and CLS.
Tom Zschach, Chief Innovation Officer at Swift, explained, “Our primary focus is on interoperability – ensuring that new digital currencies can seamlessly coexist with one another and with today’s fiat-based currencies and payment systems. The financial community has already recognized the significant potential of our CBDC innovations in preventing digital isolation while securely bridging today’s payment systems with those of the future. This next phase of testing and exploration will allow us to further refine the solution for maximum effectiveness and scalability.”