wThe financial reporting system Swift presented a plan for a global network of central bank-issued digital currencies (CBDC), after an eight-month experiment with different technologies and currencies.
The discussion, which involved the national central banks of France and Germany, global banks such as HSBC, Standard Chartered and UBS, looked at how CBDCs could be used internationally and even converted into fiat money if needed.
SWIFT’s head of innovation Nick Kerigan said its pilot, which will be followed by more advanced testing next year, resembles a bicycle wheel where 14 central and commercial seats in total have connected at its main hub.
The idea is that, once staggered, banks might only need one global primary connection, rather than thousands if they were to set up connections with each counterparty individually.
“We believe the number of connections needed is much lower,” Kerigan said. “So you’re likely to have fewer interruptions (in the chain) and you’re likely to achieve greater efficiency.”
Some countries, such as the Bahamas and Nigeria, already have CBDCs in place. China is well advanced with real-life testing of a digital yuan, while the Bank for International Settlements (BIS) is also carrying out cross-border testing.
The main advantage of SWIFT is that its existing network is already usable in more than 200 countries and connects more than 11,500 banks and funds.
Kerigan said this kind of move could also happen in a new CBDC system, but he doubted it would prevent countries from joining one.
“So a solution that is fast and efficient and that has access to as many other countries as possible seems to be attractive.”
Source: CNN Brasil
Joe Jameson, a technology journalist with over 2 years of experience, writes for top online news websites. Specializing in the field of technology, Joe provides insights into the latest advancements in the industry. Currently, he contributes to covering the world stock market.