SWIFT Completes Trade, Securities, and FX Sandbox Experiment to "Connect Digital Islands," Taiwan Also Participated

The global cross-border payment messaging system leader, SWIFT, has actively embraced blockchain technology in recent years to "connect digital islands" and facilitate seamless integration of Central Bank Digital Currencies (CBDCs) across different platforms. SWIFT has announced that it has collaborated with 38 institutions worldwide to successfully complete the second phase of sandbox testing for CBDC interlinking solutions, with the participation of the Central Bank of Taiwan and banking industry players. Source

Why is SWIFT so important? SWIFT's proactive adoption of blockchain technology provides a single entry point for financial institutions to tokenize assets.

Participants in "Connecting Digital Islands" Include Taiwan

Participants in the sandbox come from around the world and across industries, including central banks and monetary authorities from countries such as Australia, the Czech Republic, France, Germany, Singapore, Taiwan, and Thailand. Participants from commercial banks and market infrastructure include ANZ, Citibank, CLS Group, DBS Bank, Deutsche Bank, DTCC, HSBC, Hua Nan Commercial Bank, JPMorgan Chase, NatWest Group, Santander, Société Générale, Standard Chartered, Sumitomo Mitsui Banking Corporation, Shanghai Commercial & Savings Bank, Standard Bank of South Africa, Taishin International Bank, and Westpac.

Successful Applications in Trade, Securities, and Forex

The six-month experiment focused on simplifying and speeding up processes with SWIFT's interconnection solution, allowing financial institutions to leverage their existing infrastructure with successful progress in the following three areas.

Digital Trade Automation Processes

SWIFT successfully experimented with simultaneous asset and fund transfers on different digital networks and trading platforms, achieving payment automation using smart contracts and event-driven programming, potentially enabling trade flows to be automated 24/7. Participants emphasized the solution's potential in reducing global trade delays, enhancing trust among parties, and significantly lowering transaction costs.

Securities Atomic Settlement

Tokenization is a new market that has attracted broad interest due to its potential to improve liquidity, reduce transaction costs, and enhance transparency and security. However, the lack of interoperability between tokenization platforms has been a barrier to market growth.

The SWIFT project links multiple asset and cash networks and can facilitate cross-platform atomic settlement, similar to the traditional financial mechanism of Delivery vs. Payment (DvP).

Forex Trading

SWIFT also plays a role in FX and has demonstrated interoperability with existing market infrastructures to facilitate forex netting and settlement via CBDC.

Next Steps to Expand to Tokenized Deposit Platforms

With this phase completed, SWIFT plans to further expand the solution to support a broader range of emerging digital networks beyond CBDC, such as tokenized deposit platforms.