Leading provider of financial messaging services SWIFT has announced plans to reduce the difficulties experienced in cross-border transactions. The company wants to test CBDC interoperability by interlinking them for cross-border transactions.
The global network says the project will enable financial institutions to easily communicate with each other for global payments. To proceed with the project, SWIFT has partnered with France-based IT and consulting firm Capgemini for the development.
Facilitating Cross-Border Payments With CBDCs
SWIFT, in a blog post, said the cross-border utilization of CBDCs may be seen as a blind spot for this type of digital currency since it was designed specifically for implementing domestic policies. Thomas Zschach. Chief Technology Officer of SWIFT, noted that the different CBDC systems are required to work hand in hand for a “frictionless” cross-border transaction, and SWIFT wants to play an important role in it.
He added that if the CBDC potentials are to be fully realized, it will be important to facilitate interoperability and link them between different CBDCs currently under development around the world.
SWIFT Plans To Develop Cross-Border Interlinking Process For CBDCs
With the benefits of CBDCs already highlighted by different countries, there is the risk of them becoming fragmented with different protocols, standards, and different technologies. But the interoperability, the digital currencies will become useful and very important to facilitate cross-border payments.
Zschach argued that CBDCs will not serve their rightful purpose if they are the only important means of payment within the country. Rather, when a process of interlinking them is developed, it will enhance their usefulness and value across different regions.
Head of Innovation at SWIFT, Nick Kerigan, stated that the CBDC will be seen in a lot of ways as “a new form of fiat currencies.” As a result, several platforms offering services in fiat currencies will develop their platforms to integrate with the CBDCs and the traditional financial infrastructure.
SWIFT will be coming into the scene as a global provider, offering access to its services to more than 11,000 financial institutions in over 200 countries. The company will be providing an easily integrated and highly scalable solution for international payments through CBDCs.
