SWIFT, the global provider of financial messaging services, is looking at tests to link various central bank digital currency (CBDC) networks for cross-border transactions, a report said Saturday.
SWIFT has tapped Capgemini, the French information technology services and consulting company, to help with this.
According to SWIFT, the blind spot for CBDCs might be that they aren’t designed for cross-border purposes, but mostly for domestic means.
The partnership with Capgemini will help SWIFT focus on specific use cases, including “CBDC to CBDC, fiat to CBDC, and CBDC to fiat.”
SWIFT head of innovation Nick Kerigan said CBDCs are likely to be looked at as a “new form” of fiat currencies. He said there would be new platforms cropping up to parallel the old traditional payment system.
According to Thomas Zschach, SWIFT CIO, CBDCs should work together to make payments more frictionless.
“Facilitating interoperability and interlinking between different CBDCs being developed around the world will be critical if we are to fully realize their potential. Today, the global CBDC ecosystem risks becoming fragmented with numerous central banks developing their own digital currencies based on different technologies, standards and protocols.”
SWIFT worked with EBA Clearing and The Clearing House on a new pilot program for immediate cross-border (IXB) payments, a PYMNTS report said, which is likely to roll out a product by the end of 2022.
The product will be introduced in phases and will accommodate 24 financial institutions.
The three firms are developing this pilot to help out with enabling faster, smoother global money transfers, tapping options available in domestic payments.
Russ Waterhouse, executive vice president for product development and strategy at TCH, said the goal was to get “a better cross-border experience with a very short time to market.”
“The trans-Atlantic pilot service will provide valuable input for the development of a fully fledged IXB service to meet customer expectations across the globe,” he said.