After eight months of experimenting with different technologies and currencies, interbank financial settlement system SWIFT has drawn up a blueprint for a global central bank digital currency (CBDC) network, Reuters reported. The trial, which last month involved national central banks in France and Germany as well as global banks such as HSBC, Standard Chartered and UBS, looked at how CBDCS could be used internationally and even converted into legal tender if needed.
About 90% of the world’s central banks are now using, piloting or studying CBDCS. The adoption of CBDCS is seen as a major breakthrough because they can be effectively programmed to meet the specific needs of governments and individuals, although they also raise concerns about privacy and online surveillance. The SWIFT trial also tested different underlying CBDC technology, called “distributed ledger technology.” The use of different technologies in each country has also been identified as a potentially inefficient barrier to the rapid global adoption of digital currencies. Citibank, Clearstream and Northern Trust have also conducted a separate experiment with “tokenized” assets – traditional assets such as stocks and bonds that are turned into digital tokens that can then be issued and traded in real time.
Some countries, such as the Bahamas and Nigeria, already have digital currencies up and running. China is well on its way to piloting e-money, and the Bank for International Settlements, an umbrella organisation for central banks, has been conducting cross-border trials.
SWIFT’s main advantage is that its existing network is already available in more than 200 countries and connects more than 11,500 banks and funds. What most central banks want to do is provide CBDCS for the people, businesses and organizations under their jurisdiction, so a solution that is quick, efficient and has access to as many other countries as possible seems to be an attractive option.
Post time: Oct-10-2022