Analysis Blockchain for Banking News

Is SWIFT’s latest cross border CBDC solution a step forward?

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Today SWIFT announced the results of its central bank digital currency (CBDC) trials for cross border payments Capgemini. It interlinks multiple domestic payment systems (multi-CBDC or mCBDC) for cross border payments, describing the solution as ‘groundbreaking’. Our reading of the approach is it still uses intermediaries for cross border payments. And intermediaries constitute a significant cause of friction in today’s payment system. So while this concept might be practical to enable CBDC’s to be used cross border, it’s unclear whether it is a solution to today’s challenges in cross border payments.

The solution provides a connector gateway to which each domestic CBDC would integrate. “We believe our solution can offer a seamless transaction flow on a highly scalable model, with no manual intermediary message initiation required,” said SWIFT. 

SWIFT has now launched a sandbox being used by 14 central and commercial banks, including Banque de France, the Deutsche Bundesbank, HSBC, Intesa Sanpaolo, NatWest, SMBC, Standard Chartered, UBS and Wells Fargo.

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