Three central banks, including the Hong Kong Monetary Authority and the Central Bank of Kazakhstan, have entered the beta phase of SWIFT’s central bank digital currency (CBDC) interoperability project. SWIFT, a bank messaging platform, has also started a new phase of sandbox testing for its “CBDC connector solution.” The first phase of testing, which began in March and included participants such as Royal Bank of Canada and HSBC, resulted in over 5,000 transactions in 12 weeks. The number of participants in the second phase of testing is expected to exceed 30.
SWIFT has been actively involved in CBDC projects, including a wholesale CBDC project in collaboration with the New York Federal Reserve Bank. However, SWIFT’s relationship with CBDCs is complicated as the new technology could potentially compete with its existing services. Nevertheless, competition in the industry is driving innovation.
In August, SWIFT announced that 89% of the transactions it facilitates are processed within an hour, surpassing the G20’s goal of 75% one-hour settlements by 2027. However, regulatory controls, working hours, and batch processing contribute to delays in wholesale payments, with only 60% of such payments being concluded within an hour.
SWIFT’s messaging platform currently connects over 11,500 financial institutions worldwide.
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