SWIFT experimented with the CBDCs for a cross-border payment option and will also work to connect different systems to ease the difficulty in cross-border transactions since digital currencies are focused on being used in domestic use-cases so let’s read more today in our latest cryptocurrency news.
The global provider of the secure financial messaging services SWIFT experimented with CBDCs to interlink domestic networks for cross-border transactions. The network enables financial institutions to communicate with each other for global payments and tapped the French information technology services and the consulting company Capgemini for the move.
According to the official blog post, SWIFT stated that the cross-border use of CBDCs could be a blind spot for these types of digital currencies after developing them for domestic policies. SWIFT’s Chief Innovation Officer Thomas Zschah thinks that different systems of CBDCs have to work together for the frictionless cross-border transactions and SWIFT has a role in it:
“Facilitating interoperability and interlinking between different CBDCs being developed around the world will be critical if we are to fully realise 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’s Head of Innovation noted that as CBDCs get perceived as a new form of fiat currencies, a few platforms in the traditional payment system will be developed to integrate with the traditional financial infrastructures. In this case, SWIFT has a solution accessed by more than 11,000 financial institutions in more than 200 countries that aim to enable a highly scalable and easily integrated solution for international payments. The post outlined the deployment of the gateway on the domestic central bank digital currency networks with the main feature of the experiment:
“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.”
The post also reveals that SWIFT will focus on addressing three use cases and the giant also looked beyond CBDCs that try to enable interoperability between other digital assets and currencies. SWIFT is the world’s biggest international financial messaging system so after the West agreed to exclude the banks from it, the financial institutions in the region faced troubles staying afloat. Getting Russia out of the SWIFt system cut the country’s ability to liquidate the assets and transfer funds across the institutions which are members of the system. However in a bid to isolate and punish the nation but the move caused criticism from countries like China and Russia which planned to migrate to their own systems to counter the sanctions.
DC Forecasts is a leader in many crypto news categories, striving for the highest journalistic standards and abiding by a strict set of editorial policies. If you are interested to offer your expertise or contribute to our news website, feel free to contact us at [email protected]