In 2021, Swift conducted a first set of CBDC experiments that demonstrated it could successfully orchestrate a cross-border transaction between one entity on a DLT-based CBDC network and a second running on an established real-time gross settlement (RTGS) system.

This time, in collaboration with Capgemini, the trials will assess how Swift can interlink, at a network level, CBDC platforms regardless of technology, with existing payments systems.

“Facilitating interoperability and interlinking between different CBDCs being developed around the world will be critical if we are to fully realise their potential,” says Thomas Zschach, chief innovation officer at Swift. “Today, the global CBDC ecosystem risks becoming fragmented with numerous central banks developing their own digital currencies based on different technologies, standards and protocols.”

If left unaddressed, this fragmentation could lead to ‘digital islands’ springing up across the globe, believes Nick Kerigan, head of innovation at Swift.

“Different systems and different CBDCs will need to be able to efficiently work together, or it will hamper the ability of businesses and consumers to make frictionless cross-border payments using CBDCs,” he says.

Kerrigan says the new proof-of-concept will seek to demonstrate the ability to deploy a gateway on a domestic CBDC network that can intercept cross-border transactions, translate them, and send them to the Swift platform for onward transmission to another CBDC network or established payment system.

“While CBDCs offer many opportunities, we see several broad challenges facing their adoption that first need to be overcome. One is that there will be multiple CBDC platforms in development in parallel to the existing traditional payment systems,” he says. "CBDC and traditional infrastructures will need to co-exist and work together for some time to come.”