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Swift makes its case for place in CBDC world

Swift makes its case for place in CBDC world

Swift has a unique role to play in a payments ecosystem that includes central bank digital currencies, according to a joint paper from Accenture and...Swift.

With more than half of the world's central banks actively exploring CBDCs, the global payments ecosystem is set for a major shakeup.

The effect on cross-border payments may have profound implications for Swift. At last year's Sibos conference, Dave Birch, author and financial services consultant, went so far as to claim: "In a world of CBDCs, I am not sure what Swift would do."

In a new discussion paper written with Accenture, Swift offers up an answer to this question. While CBDCs could see a new parallel world based on distributed ledgers and portable digital tokens, the paper argues that "there is little advantage in reinventing the wheel".

CBDCs are likely to leverage existing payments rails where possible and new solutions will become an extension of current infrastructure, meaning that "Swift has a unique role to play in a payments ecosystem that includes CBDCs".

In an effort to ensure that it plays this "unique role," Swift is planning a host of trials over the next few months to test how its platform could interact with the cross-border use of CBDCs.

Thomas Zschach, CIO, Swift, says: "Making payments infrastructure based on CBDCs efficient and interoperable with the broader economy presents some new challenges, but the majority are the same as those faced by existing payment solutions.

"As a co-operative that is neutral and currency agnostic, with reach across 11,000 institutions in more than 200 countries, and oversight by central banks globally, Swift is well placed to engage closely in the debate and any future evolution of money."

Comments: (2)

A Finextra member
A Finextra member 12 May, 2021, 14:262 likes 2 likes

For an organization that is already irrelevant to the international banking and payments industry - their relevance in a CBDC world is completely imaginary.  Spending millions on consultants for expensive reports is not going to change that.  If there was a need for SWIFT in cryptocurrencies, then they should be doing it already. They are not. The world is just not going back to the 70s.  Sorry SWIFT.

Andrew Smith
Andrew Smith - RTGS & ClearBank - London 13 May, 2021, 15:33Be the first to give this comment the thumbs up 0 likes

I think the point of CBDC is to move away from a 9-5 banking mindset and to look at risk models in new ways. There are many opportunities with CBDCs, but lets be clear, re-inveting the wheel may seem obvious to crypto folks, but its not what CBDC should be focussed on. If the use cases are all about making "payments", then SWIFT is right, why re-invent the wheel and disrupt economic and regulatory leavers that we understand. The upside for these use-cases is too little....