SWIFT, the Belgian financial messaging network used by banks in international money transfers, announced Thursday that it will collaborate with French IT firm Capgemini to test cross-border central bank digital currency (CBDC) payments. SWIFT's CBDC research effort is it's second.
As a proof of concept, SWIFT and Capgemini are testing strategies to connect numerous CBDC networks, as well as CBDC and traditional currency networks. The majority of central banks around the world are working on CBDCs, with "many central banks building their own digital currencies based on various technologies, standards, and protocols," according to Thomas Zschach, SWIFT's chief innovation officer.
According to the company's statement, it is working on a gateway for domestic CBDC networks that will intercept, translate, and send messages to the SWIFT platform for further transmission. Existing SWIFT standards, authentication mechanisms, and infrastructure will be used in the system. Over 11,000 financial institutions in over 200 countries are connected with SWIFT.
SWIFT's new partnership builds on previous work with Accenture, an American professional services firm. A cross-border transaction between a CBDC network and "an established real-time gross settlement (RTGS) system" was created as a result of this partnership.
Nick Kerigan, the head of innovation at SWIFT, stated. "This would assist CBDCs to overcome a significant technological and industry obstacle." It may also enable us to assist central banks in preparing their own CBDC networks for cross-border payment."