SWIFT completes the second phase of CBDC testing with atomic settlement capability and smart contracts


A broader use of digital ledger technology was the focus of the company’s experiment.

On March 25, SWIFT said that after a successful six-month test, it found many uses for its CBDC solution. Instead of making its own CBDC, the business came up with a way for other CBDCs to connect to each other; they called it the SWIFT connector.

Digital commerce, securities, and overseas trade are some of the areas that SWIFT has indicated the platform might be useful for. Also mentioned were plans to extend the technology beyond CBDCs in future generations, maybe even to bank-led tokenized deposit networks.

Trade payments, currency exchange, DvP, and liquidity-saving techniques are some specific use cases. According to SWIFT, their sandbox solution utilizes a number of different DLT networks. Hyperledger Besu was the platform that the firm utilized for tokenization. For the networks of buyers and sellers as well as the instructions for settlement, it used R3 Corda and Hyperledger Fabric.

Additionally, SWIFT detailed atomic settlements and swaps, a method of settlement based on blockchain or DLT that allows for the immediate and simultaneous exchange of two assets. Delivery versus payment (DVP) is a common settlement method in more conventional financial networks.

Additionally, the site made use of smart contracts to mechanically execute payments upon fulfillment of criteria. Smart contracts were integral to each of SWIFT’s four primary use cases.

During its six-month sandbox test, which SWIFT dubbed “one of the biggest known CBDC tests to date,” 38 institutions participated, according to the company.

It went on to say that over 125 sandbox users executed over 750 transactions, which is a lot of network activity. There were twenty joint working group meetings where sixty-five representatives from the member banks discussed use cases.

The business has said that “market developments and preparedness” will determine how far along the manufacturing roadmap for the SWIFT connection the firm is willing to go.

The service has the potential to cater to the increasing demand for CBDCs globally. Among the countries that have CBDCs in operation are Nigeria, Jamaica, China, and the Bahamas. There have been significant advancements in the exploration of CBDCs in Europe, the Philippines, and Spain, among at least 130 other nations and areas.

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