In a major step forward in the global adoption of central bank digital currencies (CBDCs), or at the least the theoretical adoption, SWIFT has initiated a worldwide pilot phase.
The global banking cooperative has enabled central and commercial banks in North America, Europe and Asia to carry out trial transactions of digital currencies and assets in a series of pilots.
The end goal of these pilots is to demonstrate SWIFT’s ability to facilitate cash flow across 200 countries and territories in as many forms as possible. The cooperative may be hoping to demonstrate the possibilities and advantages of further CBDC adoption.
SWIFT adds that the trials will look at how a single window of access for multiple digital asset classes and currencies can be provided to its member financial institutions. Use cases will focus on payments, FX, securities and trade.
Tom Zschach, Chief Innovation Officer at Swift, said: “For digital assets and currencies to succeed on a global scale, it’s critical that they can seamlessly coexist with traditional forms of money.
“With Swift’s vast global reach we are uniquely positioned to bridge both emerging and established forms of value, and we’re now focused on demonstrating this in real-world, mainstream applications.
“As new forms of value emerge, our intention is to continue offering our community the ability to seamlessly make and track transactions of all kinds of assets – using the same secure and resilient infrastructure that is integral to their operations today.”
CBDCs are being explored by a huge number of countries, from small economies to significant global players, to even cross-national bodies. The European Central Bank, for example, has been eyeing up the benefits of a ‘digital Euro’, though such an idea would need to be sold to EU legislators and policymakers.
Individual countries such as the UK are also moving towards adoption. The Bank of England, the UK central bank, has been active and vocal in its ‘digital pound’ exploitation, entering phase two of its preparatory work back in January.
SWIFT has cited recent industry figures showing that 134 countries are exploring CBDCs and that the tokenized asset market is expected to reach a valuation of $16trn by 2030. By trialling international CBDC transactions, the cooperative hopes to overcome fragmentation and connect previously unconnected platforms and technologies.
Whilst many in the banking sector may be keen on CBDCs, the digital currencies still have some detractors. These detractors are particularly found in public and political circles, with some consumers concerned about the possible traceability of their finances by central government, whilst politicians, like 2024 US presidential nominee Donald Trump, are vocally opposed to further development.
