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SWIFT nails second round of sandbox connector tests for CBDCs



SWIFT recently declared the success of its second set of sandbox trials, which included testing for central bank digital currencies (CBDCs). After successfully trialing the connector, SWIFT plans to continue expanding its functionality.

SWIFT, a global interbank messaging system, recently announced the results of the second phase of sandbox testing for its CBDC interlinking solution, known as the connector.

According to the report, the project explored four different use cases, not all of which involved CBDCs. The first use case involved testing smart contract-based digital trading with atomic (instantaneous) settlement.

The second use case demonstrated how the connector can link tokenization platforms for atomic delivery versus payment. The third use case involved connecting existing foreign exchange infrastructures using CBDC through a partnership with CLS Group.

The fourth application, which aimed to minimize liquidity fragmentation across platforms using its Liquidity-saving Mechanism algorithms, was termed a “theoretical exercise,” accompanied by bilateral discussions.

To test the connector’s interoperability across various blockchains, the project used R3’s Corda, as well as Hyperledger Fabric and Besu. It concluded:

“A single point of access provided by Swift can enable institutions to reuse their existing channels, reach new networks, and bring down participation costs.”


SWIFT also stressed that traditional financial solutions would continue to exist and would also require interconnectivity.

In other news, as three central banks team up with Swift for CBDC interoperability testing, the CEO of Swift discusses how the organization can assist in implementing cross-border CBDCs for nations.

After completing the sandbox experiments, SWIFT intends to continue developing the beta version of its connector, focusing on implementing smart contracts across networks, locking and releasing tokens across networks through cryptographic means, and maintaining the tokens’ data and programmability across networks.

The sandbox tests involved over 125 users and 750 simulated transactions, which were used to demonstrate several complex use cases for SWIFT’s CBDC interlinking solution.

The sandbox’s second phase included several organizations, including ANZ, Citibank, Deutsche Bank, DTCC, HSBC, Société Générale, Standard Chartered, Sumitomo Mitsui, Shanghai Commercial & Savings Bank, and at least seven central banks or monetary authorities.

In September, SWIFT announced the start of its first set of sandbox tests, which it completed in March 2023. SWIFT explored a variety of potential future use cases for its CBDC interlinking solution.

In parallel with the CBDC interlinking solution, SWIFT has also been investigating a unified ledger model for settlements. Like the CBDC sandbox, this research focused on leveraging existing technology, including SWIFT.


Read also: Ethereum Foundation alongside zkSync allocates $900K for ZK Layer 2 development


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