These central banks join the beta phase of SWIFT’s CBDC project. Assessing…

• Three more banks would be joining SWIFT’s CBDC interoperability projects. 
• SWIFT’s network has seen a dramatic increase in processing speed in the beta phase.

On 13 September, SWIFT announced that three more central banks entered the beta phase of its Central Bank Digital Currency (CBDC) interoperability project. Alongside this, SWIFT has expanded its sandbox testing program, which commenced in March.

The central banks making their debut in SWIFT’s CBDC interoperability project are the Hong Kong Monetary Authority, the Central Bank of Kazakhstan, and an unnamed central bank. These institutions have seamlessly integrated their infrastructure with SWIFT’s “CBDC connector solution.” They will begin direct testing and collaboration.

This latest development follows the initial phase of sandbox testing which featured an impressive lineup of over 18 participants. Notable entities include the Royal Bank of Canada, Banque de France, Société Générale, BNP Paribas, Monetary Authority of Singapore, HSBC, Deutsche Bundesbank, and NatWest. Over the course of 12 weeks, the sandbox facilitated more than 5,000 transactions with the program set to surpass 30 leading institutions in number.

SWIFT’s expanding role in CBDC interoperability

SWIFT’s venture into the realm of CBDCs encompassed various projects. One of them involves collaborating with the New York Federal Reserve Bank on a wholesale CBDC project that utilizes a regulated liability network. While SWIFT’s traditional role in facilitating bank-to-bank communication remains essential, the rise of CBDCs introduces the possibility of competition.

Entities like the Bank for International Settlements also initiated CBDC bridging projects. Furthermore, this reflects the potential for new technologies to challenge established systems and foster innovation.

SWIFT’s network has seen a dramatic increase in processing speed in the beta phase. In August, the banking system achieved significant milestones in its core operations. It proudly announced that its network processed an impressive 89% of transactions within a one-hour timeframe.

This achievement surpassed the G20’s goal of achieving 75% one-hour settlements by 2027. Additionally, 84% of transactions on the SWIFT network were directly executed or involved a single intermediary. However, it’s worth noting that, in practice, only 60% of wholesale payments concluded within an hour.

Contributing factors to this deviation from the network’s capabilities included regulatory controls, working hours, and batch processing.