SWIFT is Collaborating with Capgemini to Test CBDC Cross-Border Payments

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The SWIFT, an abbreviation of the Society of Worldwide Interbank Financial Telecommunication, announced its collaboration with the French IT firm Capgemini on Thursday. Banks worldwide use this Belgian financial messaging network for international fund transfers. 

It aims to perform cross-border CBDC payment trials with this corporation. It is a second such CBDC research product conducted by SWIFT.

SWIFT also published a study detailing its experiments with the Bank of International Settlements on the same day. The CBDCs include economies amounting to over 90% of the global GDP. 

A rising number of these central banks are investigating CBDC, with nine countries now using their own digital currency. Notably, the list also includes The Bahamas and Nigeria.  

Advantages of Interlinking CBDCs

CBDCs have garnered a lot of attention recently. These digital equivalents of central bank money could help achieve domestic policy goals. However, there is one weakness, their use to make cross-border payments. 

“Facilitating interoperability and interlinking between CBDCs is critical if we wish to realize their potential fully. The CBDC ecosystem worldwide is fragmented. Most central banks focus on their own digital currencies based on various standards, technologies, and protocols,” said Chief Innovative Officer Thomas Zschach at SWIFT. 

As per its statement, SWIFT is working on a gateway for domestic CBDC networks to send, translate, and intercept messages to the SWIFT platform for further transmission. It will build the system on top of existing SWIFT standards, authentication procedures, and infrastructure. SWIFT is a global financial messaging system that connects over 11,000 financial institutions in over 200 countries.

SWIFT will build on previous engagement with Accenture, an American professional services organization with the new cooperation. A cross-border transaction between a CBDC network and “an existing real-time gross settlement (RTGS) system” was developed with this association.

Last year, SWIFT handled 42 million transactions every day, although network transactions sometimes take several days to complete. It is making extensive efforts to maintain its position in the global economic order, notably regarding CBDCs. CBDCs are expected to communicate outside of the regular network, maybe with the help of Ripple (XRP), according to many developers.

The Collaborative Experiments

With this partnership, SWIFT aims to develop a highly scalable solution that offers simple integration to make any CBDC network ready for cross-border payments quickly. 

The PoC model ensures that SWIFT offers efficient transaction orchestration regardless of the platforms used. In association with Capgemini, SWIFT is addressing three use cases:

  • CBDC to CBDC
  • Fiat to CBDC
  • CBDC to Fiat

“If the testing goes well, it will show that SWIFT has the competence and technical components to interconnect other networks,” Nick Kerigan, Head of Innovation Execution at SWIFT, said. “This would enable CBDCs to overcome a significant technological and industry hurdle.” It may also enable us to assist central banks in preparing their own CBDC networks for cross-border payment.”

SWIFT further stated that it is already in the advanced stages of the experiment and will shortly publish its results. It is also looking beyond CBDCs to how we can allow interoperability between cryptocurrencies and other digital assets as they are developed and become regulated worldwide. 

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Rucha Joshi, currently managing a team of over 20 content writers at TimesNext is fueled by her passion for creative writing. She is eager to turn information into action. With her hunger for knowledge, she considers herself a forever student and a passionate leader.

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