Swift, a financial communication system, launched a project, in collaboration with Capgemini, to create a global network with digital currencies issued by central banks, also called CBDCs.
The plan encompasses central banks of countries such as France and Germany and globally operating institutions such as HSBC, Standard Chartered and UBS. In the conversations held, it was studied how CBDCs can be used internationally and even converted into fiat money, if necessary.
Initial tests lasted eight months and should continue this year. The central idea is to connect 14 central and commercial banks around this main network. With this, the objective is that institutions only need a global connection, providing much more ease, simplicity and agility.
After all, if these connections were made to each counterparty individually, there would be thousands of connections.
“Today, the global CBDC ecosystem is at risk of fragmenting with multiple central banks developing their own digital currencies based on different technologies, standards, and protocols. Facilitating interoperability and interconnection between the different CBDCs that are being developed around the world will be essential if we want to make the most of their potential.said Thomas Zschach, Swift’s chief innovation officer, in an article on the company’s website.
Swift’s chief innovation officer, Nick Kerigan, echoed his colleague’s view of the need to push this integration forward. “If left unaddressed, this fragmentation could lead to the emergence of ‘digital islands’ around the world. Different systems and different CBDCs will need to be able to work together efficiently, or this will hinder the ability of businesses and consumers to make frictionless cross-border payments using CBDCs.”.
How important is Swift in this scenario?
Swift is an abbreviation for Society for Worldwide Interbank Financial Telecommunication. It could be translated as “Society for Worldwide Interbank Financial Telecommunication“. In practice, the system allows the exchange of banking information and financial transfers between banks.
Therefore, this service is commonly used for transfers between institutions in two different countries, or even more nations. Likewise, the system can be used by investors operating abroad.
How is the evolution of CBDCs currently?
According to a study by the Atlantic Council, 11 nations have already launched central bank digital currencies. Currently, a total of 114 countries are working to formulate and launch their CBDC, including Brazil with the digital royal project. This group represents 95% of world GDP.
These data, updated in December 2022, are contained in the CBDC Tracker, a monitoring of initiatives and proposals for use created by the Atlantic Council.
Of the countries that have national digital currencies, there are Nigeria, Bahamas and Jamaica. China has one of the most advanced projects in the world, with the digital yuan that aims to reach 260 million people.
The data also reveals that, in the year 2023, 20+ countries should significantly evolve to test CBDC. This list includes Brazil, Australia, Thailand, India, South Korea, and Russia.
In Brazil, the expectation is that the tests of the digital real begin in the second half of 2023, with the launch scheduled for 2024.
The European Central Bank (ECB), in turn, should also start a pilot project during 2023.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
It may interest you:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the entire amount invested may be lost. The services or products offered are not directed or accessible to investors in Spain.