The communications network of the Society for Worldwide Interbank Financial Telecommunications (SWIFT) has published the results of the second phase of sandbox testing for its central bank digital currency pooling (CBDC) solution, which it calls the Connector.
According to the published report on the test results, the project examined four use cases, not all of which involved CBDC . It experimented with digital trading with atomic (instantaneous) settlement using smart contracts. Connected tokenization platforms , to facilitate atomic delivery instead of payments, and worked with financial infrastructure company CLS Group to demonstrate the connectivity of existing currency infrastructures using CBDC.
The fourth use case, involving the use of liquidity-saving mechanism algorithms to reduce liquidity fragmentation on platforms, was described as a "paper exercise accompanied by bilateral discussions."
The project used R3's Corda blockchain and Hyperledger Fabric and Besu to demonstrate interoperability between the two connectors. It stated:
"The single access point provided by Swift can enable institutions to reuse existing channels, reach new networks and reduce the cost of participation."
SWIFT also stressed that traditional financial solutions will continue to exist and will also require interconnection.
After the sandbox experiments are complete, SWIFT plans to further develop the beta version of its connector, focusing on the implementation of smart contracts on networks, cryptographic locking and release of tokens on networks, and data preservation and programmability of tokens on networks.
More than 125 users performed more than 750 simulated transactions to demonstrate the complex use cases of the SWIFT CBDC linking solution. Participants in the second phase of the sandbox included ANZ, Citibank, Deutsche Bank, DTCC, HSBC, Société Générale, Standard Chartered, Sumitomo Mitsui and Shanghai Commercial & Savings Bank, as well as at least seven central banks or monetary authorities.
