SWIFT tests CBDCs with Capgemini


Created: June 1st 2022

Interest in Central Bank Digital Currencies (CBDCs) is growing amongst central banks amid a debate over the shaping of regulations regarding CBDCs. Private sector firms are now testing the exchange of CBDCs to be future-ready.

In such, Belgium headquartered interbank payments consortium SWIFT has announced that it has conducted experiments with Central Bank Digital Currencies (CBDCs) in collaboration with consulting firm Capgemini. Under this, it was tested how ‘SWIFT can interlink the multiple domestic-based CBDC networks emerging worldwide to make cross-border payments with CBDCs more seamless and frictionless’.

Back in 2021, SWIFT had conducted tests in relation to CBDC which experimented with the cross-border transaction between one entity on a distributed ledger technology (DLT)-based CBDC network and a second running on an established real-time gross settlement (RTGS) system.

“While CBDCs offer many opportunities, we see several broad challenges facing their adoption that first need to be overcome. One is that there will be multiple CBDC platforms in development in parallel to the existing traditional payment systems,” said Nick Kerigan, Head of Innovation at SWIFT.

In news related to the company, EBA Clearing, SWIFT and The Clearing House test cross-border payments last month.

In this test, SWIFT showed the ability to deploy a gateway on a domestic CBDC network. As noted, the gateway will intercept cross-border transactions on the network, translate them, and send them to the SWIFT platform for onward transmission to another CBDC network or established payment system.

Adding that this will be a proof of concept which will address the interlinking of different CBDCs while using the existing bank messaging standards and authentication models, including ISO 20022 and SWIFT’s Private Key Infrastructure.

The three different use cases such as CBDC to CBDC, fiat to CBDC, and CBDC to fiat. Were taken into consideration in collaboration with Capgemini.