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The Global Interbank Financial Messaging Network (SWIFT) is exploring the possibility of interoperability of domestic government digital currency platforms for international payments.
Thomas Zschach, Director of Innovation at SWIFT, expressed concern that central banks are separately developing platforms for state digital currencies. He believes that the differences between CBDCs could lead to problems with their interaction in the future. Therefore, SWIFT together with the consulting company Capgemini are studying the possibilities of connecting various platforms of digital currencies of the Central Bank.
“Ensuring interoperability and connectivity between the various CBDCs being developed around the world will be critical if we are to realize their full potential. Today, the global ecosystem of digital currencies of the Central Bank risks becoming fragmented, as many central banks develop their own digital currencies based on different technologies, standards and protocols,” Zschach said.
Nick Kerigan, head of SWIFT innovation, said that this could lead to serious consequences, the solution of which in the future will require resources and time.
“If left unchecked, this fragmentation could lead to the emergence of ‘digital islands’ around the world. Different systems and state digital currencies should be able to work together effectively, otherwise it will hinder cross-border payments using the digital currencies of the Central Bank,” Kerigan said.
He said that in 2021, SWIFT conducted the first series of experiments with state digital currencies, which demonstrated that an organization can successfully carry out a transaction between one object in the DLT-based CBDC network and the second operating in an established real-time gross settlement system (RTGS).
Sudhir Pai, Director of Technology, Innovation and Financial Services at Capgemini, noted that navigating decentralization is difficult due to the multitude of technology options, operating models and policy considerations. But a well-defined taxonomy has helped accelerate joint efforts to create a relationship between the central bank’s digital currencies and SWIFT. The next stage of cooperation with SWIFT is aimed at creating industry standards and frameworks.
At the end of last year, it was reported that in 2022 SWIFT plans to test the procedures for interaction in the tokenized securities market.
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