The financial network seeks to construct a system that will link the digital currencies of many nations.
SWIFT’s effort to link central bank digital currencies, or CBDCs, has “obvious promise and value,” the firm said in a Thursday statement.
The project, which included banks such as France’s BNP Paribas, Italy’s Intesa Sanpaolo, and the United Kingdom’s Standard Chartered (STAN), along with the central banks in France and Singapore, will now enter a second phase of testing to evaluate applications such as trade finance and securities settlement.
HSBC’s global head of domestic and emerging payments, Lewis Sun, said in a statement that the SWIFT project could lead to “faster, cheaper, and more secure cross-border payments” as interest in CBDCs increases, but so does the risk of fragmentation as a broader range of technologies and standards are experimented with.
Many nations, such as the Bahamas and Nigeria, have already issued digital versions of their national currency. Others, including the United Kingdom and the European Union, are considering doing so. International organizations such as the International Monetary Fund and the Bank for International Settlements have urged central banks to collaborate to reduce the time and expense of cross-border transfers.
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