The SWIFT banking messaging service, which dates back to the 1970s, strives to connect CBDCs such as eNaira to each other, as well as to traditional currencies, while trying to stay up to date.
It was announced on Thursday that SWIFT has partnered with French IT company Capgemini to test cross-border central bank digital currency (CBDC) payments as part of a new study. SWIFT is the Belgian network used by banks for international money transfers. This is the second project undertaken by SWIFT on CBDC.
“Capgemini and SWIFT are working together to develop a proof of concept to link a variety of CBDC networks with other traditional currency networks. Globally, most central banks are creating CBDCs, “with a number of banks using different technologies, standards and protocols” for their digital currencies,” said SWIFT Chief Innovation Officer Thomas Zschach.
- As stated in the company’s statement, the company will develop a gateway that will intercept, translate and send domestic CBDC transactions to SWIFT for onward transmission. It will build on existing SWIFT protocols, authentication models and infrastructure. More than 11,000 financial institutions are connected in 200 countries via SWIFT.
- The new alliance is a continuation of the efforts undertaken by SWIFT with Accenture last year. Thanks to this collaboration, a CBDC network and an RTGS system were able to carry out a cross-border transaction.
- The experiments will demonstrate that SWIFT has the capacity and the technical components to link different networks if successful.
- Nick Kerigan, Head of Innovation at SWIFT, said: “This would help CBDCs solve a major industry problem. We can also help central banks make their own CBDC networks capable of making cross-border payments.
The SWIFT network processed 42 million messages a day last year, but transactions can take several days to process. As part of the international economic order, it tries to maintain its relevance, especially vis-à-vis the CBDCs.
Some developers predict that CBDCs will interact outside the traditional network, possibly using Ripple (XRP).