SWIFT is attempting to integrate several CBDC technologies in development today. The corporation teamed up with Capgemini. Their plan is to test new CBDCs for cross-border transactions and remittances.
SWIFT is Preparing to Update Its Connection Systems
SWIFT is attempting to provide services for CBDCs. The test with decentralized platforms, which the member-owned organization has declared it’s doing. It is being carried out to guarantee consumers of these assets can send and receive money.
The interconnectedness of this new type of currency would be critical to its success. Although there are not many CBDCs operating right now, based on the BIS data. 9 out of 10 central banks are already looking into the possibility of CBDCs. That clearly indicates that the concept is gaining traction.
Nick Kerigan said that CBDCs and multiple systems must successfully operate together properly. Otherwise, it will hinder companies’ and users’ skills. They would be unable to build frictionless cross-border transactions with CBDCs.
Experimentation with CBDC
SWIFT’s trials are being carried out in collaboration with Capgemini. They are examining the potential of these new assets. So they would know if it can get swapped between systems that weren’t built to do so. It’s not clear exactly how this system works. However, SWIFT explains that some traditional payment technology is being leveraged. For instance, SWIFT’s secret key architecture and ISO 20022.
The trials used many decentralized ledger systems. That way, they can prove that their aims are achievable. Some of those systems include Quorum and Corda. CBDCs might coexist with existing fiat currencies. But via SWIFT networks in a transitional period to total digitalization. As cryptos become more regulated, SWIFT noted the prospect of adding them to its system.
Apart from connectivity difficulty, Venezuelan assets in Russia may encounter another obstacle. The ruble declined by over 30% since information about the SWIFT cutoff of Russian banks broke. It affects organizations and nations with savings denominated in Russian fiat money.
A worsening of the war in Ukraine could have a negative impact on Venezuelan assets. The assets are held in Russian institutions. Juan Gonzalez says that these sanctions will affect other nations on the continent. According to Gonzalez’s assertion, there’d be repercussions for countries connected to Russia’s economy.
As a result, Venezuela will begin to feel the pressure from Nicaragua and Cuba. Authorities suspected Venezuela of utilizing BTC to circumvent sanctions. Although, its skills and cryptocurrency holdings remain unclear.