SWIFT has ‘unique role to play’ in CBDC ecosystem

SWIFT has said it has a “unique role to play” in a payments ecosystem that includes CBDCs, following the publication of a joint report exploring the cryptocurrency.

The paper, published by SWIFT and consultancy Accenture, looks at central bank digital currencies in cross-border payments as part of “broader digital asset innovation” to help financial services prepare for the possibility of moving payments in new currency formats.

The organisation said that interoperability will be key to the success of CBDCs and while they present new challenges and opportunities, the paper concludes that continued exploration of the digital currency is “likely to leverage existing payments rails where possible.”

The society also predicts that new solutions will become an extension of currency infrastructure, with SWIFT playing a distinctive role in the CBDC system.

SWIFT said that with more than half of the world’s central banks considering the use of a central bank cryptocurrency, the document explores the practicalities of such a shift, looking at everything from the ways in which CBDCs would move across jurisdictions to the integration of the digital assets into the mix of existing currencies.

“Making payments infrastructure based on CBDCs efficient and interoperable with the broader economy presents some new challenges, but the majority are the same as those faced by existing payment solutions,” said Thomas Zschach, chief innovation officer, SWIFT. “As a co-operative that is neutral and currency agnostic, with reach across 11,000 institutions in more than 200 countries, and oversight by central banks globally, SWIFT is well placed to engage closely in the debate and any future evolution of money.”

SWIFT will take a “deeper dive” into CBDCs over the coming months, including trials to see how the organisation’s platform and renewed focus on transaction management services could interact with the cross-border use of CBDCs.

In collaboration with the community, SWIFT intends to explore its role further - both as a carrier of authenticated information about CBDC transactions, as it does today for fiat currencies, and as a carrier of actual CBDC value in whatever form it is issued.

David Treat, a senior managing director at Accenture said: “Central Bank Digital Currency has emerged as an important new tool in the global push to modernise financial infrastructure to meet the needs of our increasingly digital and connected world. As an integral part of the financial services infrastructure, SWIFT plays a critical role in illustrating the possible strategic moves its members may undertake as CBDC begins to transform the financial services landscape. We welcome this partnership and are eager to continue to drive responsible and valuable innovation together."

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