Swift to launch new platform for digital currencies in next two years
Make us a preferred source
Make us a preferred source on Google
The news: Global banking messaging system, Swift, is planning to launch a new platform in the coming two years to allow central bank digital currencies (CBDC) to connect to the financial system.
The numbers: Over 90% of central banks around the world are exploring the possibility of launching a CBDC. Swift’s messaging services are used by almost 11,000 financial institutions and corporations across 200 countries. In December 2022, Swift recorded an average of 44.8 million FIN messages per day.
The context: CBDCs are a form of digital currency issued by a country’s central bank, and while similar to cryptocurrencies, their value is fixed by the central bank and is equivalent to the country’s fiat currency. A number of countries including Jamaica, Bahamas and Nigeria have already launched CBDCs, while other central banks including China and the ECB are advanced in their CBDC trials.
Swift’s head of innovation, Nick Kerigan, told Reuters that its latest trial was one of the largest global projects on CBDCs and tokenised assets to date, with central banks, commercial banks and settlement platforms all participating. The trial showed that even if CBDCs were built on different underlying technologies, they could still be used in complex trade and foreign exchange payments, and that automation was also possible.
Kerigan also referred to a forecast from Boston Consulting Group (BCG) that by 2030 around $16 trillion worth of assets could be "tokenised" - a process where assets like stocks and bonds are transformed into digital chips that can then be issued and traded in real-time. "If we can plug in any number of networks (into the Swift system) it becomes a much more scalable option for the industry," he said.
The sources: Swift press release, Reuters
