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SWIFT, the global bank messaging network, is gearing up to launch a new platform within the next one to two years to connect the burgeoning wave of central bank digital currencies (CBDCs) to the existing financial system, as revealed to Reuters.
Significance for CBDC Ecosystem:
This development is substantial for the nascent CBDC ecosystem, given SWIFT’s pivotal role in global banking operations. The platform launch is likely to coincide with the rollout of major CBDC initiatives.
Approximately 90% of the world’s central banks are currently exploring the development of digital versions of their currencies, driven partly by the rise of cryptocurrencies like Bitcoin. However, they face various technological challenges in implementation.
The transition from Experimental to Operational:
SWIFT’s head of innovation, Nick Kerigan, highlighted the organization’s recent trial involving diverse stakeholders, demonstrating the interoperability of different countries’ CBDCs and their potential in complex financial transactions.
Following the trial’s success, SWIFT is now focused on transitioning from the experimental phase to operationalizing the new platform. Kerrigan outlined a timeline of 12-24 months for product launch, contingent on major CBDC launches.
Maintaining Dominance in Financial Infrastructure:
Swift’s move is strategically aimed at maintaining its dominant position in the bank-to-bank infrastructure, leveraging its extensive network spanning over 200 countries and connecting thousands of banks and funds worldwide.
Several countries, including the Bahamas, Nigeria, Jamaica, and China, are already implementing or trialing CBDCs, and others, like the European Central Bank and the Bank for International Settlements, are also actively involved in CBDC initiatives.
