- The SWIFT (Society for Worldwide Interbank Financial Telecommunication) cooperative is preparing to launch its central bank digital currency (CBDC).
- This comes in response to the BRICS’ plan to adopt a unified digital currency for its member countries.
Largest CBDC Experiment by Swift
According to Swift, they have been collaborating with 38 institutions in the past six months for their largest central bank digital currency experiment by far. The cooperative has already successfully tested the application of their CBDC and other digital tokens within simulated digital trade, tokenized asset, payment, and foreign exchange systems. The simulation involved 125 sandbox users across 750 transactions.
“Swift is a community–a convener of and for our industry–and I’m delighted that we’ve been able to facilitate these critical innovation experiments,” said Swift Chief Innovation Officer (CIO) Tom Zschach. “They show that institutions can continue to use much of their existing infrastructure alongside new, innovative technologies.”
The CBDC project just concluded its second phase, and Swift aims to roll it out within the next two years. Based on the insights gained from the experiments, the interlinking solution resulted in streamlining and speeding up trade flows. They likewise demonstrated the potential of the network to pave the way for the growth of the tokenized securities market and efficiency in foreign exchange settlements.
“We are looking at a roadmap to productize in the next 12-24 months,” stated Swift Head of Innovation Nick Kerigan in an interview with Reuters. “It’s moving out of experimental stage towards something that is becoming a reality.”
A Response to BRICS’ De-Dollarization Efforts
Previously, Russia’s representative, Yuri Usharov, confirmed that the BRICS alliance is planning to develop a blockchain-based payments system that will support settlements in digital assets like cryptocurrencies. There was neither a deadline nor details about the cryptos the platform will support though.
The Kremlin aide noted that more discussion centering on the matter will be laid down at the next BRICS summit in Kazan by October this year. Usharov commented in an interview that the digital economy they are eyeing aims to provide convenience, cost-effectiveness, and freedom from politics for the participating governments, masses, and businesses.
However, critics have expressed concerns over the potential utilization of the new BRICS payment network to skirt the sanctions imposed by the US and its allies against hostile nations. The current composition of the BRICS alone has countries under sanctions by the US, including Russia, China, Iran, and Ethiopia.
With the Swift CBDC in place, BRICS’ dream of de-dollarization could be foiled or at least become more challenging to implement on a broader scale. So far, Swift remains the largest, most secure, and most streamlined network for international trade settlement and payment systems. It is used by over 11,000 member institutions globally.