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Swift finds role as global hub for CBDCs and tokenised assets

Swift finds role as global hub for CBDCs and tokenised assets

Financial messaging network Swift has released the results of a trial that allowed digital currencies and assets to flow smoothly alongside, and interact with, their traditional counterparts by bridging between different distributed ledger technology (DLT) networks and existing payment systems

In a milestone pilot test, Swift, in collaboration with Capgemini, achieved CBDC-to-CBDC transactions between different DLT networks based on popular Quorum and Corda technologies, as well as fiat-to-CBDC flows between these networks and a real-time gross settlement system.

Tom Zschach, chief innovation officer at Swift says that the success showed that the blockchain networks could be interlinked for cross-border payments through a single gateway, and that Swift’s new transaction management capabilities could orchestrate all inter-network communication.

“For CBDCs, our solution will enable central banks to connect their own networks simply and directly to all the other payments systems in the world through a single gateway, ensuring the instant and smooth flow of cross-border payments," he says.

14 central and commercial banks, including Banque de France, the Deutsche Bundesbank, HSBC, Intesa Sanpaolo, NatWest, SMBC, Standard Chartered, UBS and Wells Fargo, are now collaborating in a testing environment to accelerate the path to full scale deployment.

As reported by Finextra yesterday, a seperate Swift-led pilot has also successfully implemented a common framework linking tokenisation systems between CSD’s and global custodians.

Working in collaboration with Citi, Clearstream, Northern Trust, and technology partner SETL, Swift explored 70 scenarios simulating market issuance and secondary market transfers of tokenised bonds, equities and cash. The tests demonstrated that its infrastructure could be used to create, transfer and redeem tokens and update balances between multiple client wallets, as well as provide interoperability between different tokenisation platforms and existing account-based infrastructure.

Says Zschach: “Tokenisation has great potential when it comes to strengthening liquidity in markets and increasing access to investment opportunities, and Swift’s existing infrastructure can ensure these benefits can be realised at the earliest opportunity, by as many people as possible.”

Comments: (1)

Andrew Smith
Andrew Smith - RTGS & ClearBank - London 06 October, 2022, 08:18Be the first to give this comment the thumbs up 0 likes

These sorts of trails are interesting - but they often skip out the challenging aspects of financial services. This is no different. We can all prove the value of a technology and method of working if we skirt round the big issues and challenges.

Let's look at central banks ability to run KYC/AML across CBDC holders, let's look at who is eligble to have legal claim over a sepcific CBDC, let's look at data transit, data at rest, soverign ownership. Sadly here, DLT introduces more challenges than it solves...