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SWIFT Just Announced Integration of Various Countries' CBDCs for Cross-Border Payments, Mastercard CEO: SWIFT May Lose Dominance in Five Years

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SWIFT Just Announced Integration of Various Countries

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) recently reported that it is actively working on connecting with various central bank digital currencies (CBDCs) to facilitate smoother cross-border payment applications. However, the CEO of Mastercard believes that SWIFT may not hold a dominant position in 5 years.

Promoting CBDC Cross-Border Payments

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) recently published a joint paper with the Bank for International Settlements (BIS) focusing on the opportunities and challenges of Central Bank Digital Currencies (CBDCs) in cross-border payments. The paper outlines how SWIFT is developing new solutions to integrate various CBDCs from different countries to facilitate smoother international cross-border payments.

Thomas Zschach, the Head of SWIFT's New Ventures, pointed out that many central banks are developing digital currencies based on different technologies and standards, posing a risk of fragmentation in the global CBDC ecosystem. Nick Kerigan, SWIFT's Head of New Ventures, also acknowledged that this could lead to the formation of "digital islands" among countries.

However, SWIFT has not publicly disclosed the operational details of the CBDC cross-border payment system but emphasized its integration with existing payment infrastructures, including the international standard ISO 20022, banking message standards, identity verification models, and SWIFT's private key infrastructure.

SWIFT

According to previous reports, SWIFT stands for the Society for Worldwide Interbank Financial Telecommunications. It serves as the financial communication infrastructure that connects global banks, often likened to the "Gmail of the banking industry," facilitating secure messaging among its members. SWIFT is headquartered in Belgium and was established in 1973 by 239 banks from 15 countries to establish a way to handle cross-border payments.

Today, SWIFT connects over 11,000 financial institutions in more than 200 countries and regions, processing an average of 40 million messages daily, including orders, payment confirmations, foreign exchange, and transactions. While SWIFT does not transfer or hold funds itself, it plays a crucial role as the communication infrastructure for facilitating cross-border fund flows.

Will SWIFT Survive?

Participants at the World Economic Forum's annual summit included:

  • David Treat, Executive Director at Accenture David Treat
  • Michael Miebach, CEO of Mastercard Michael Miebach
  • Yuval Rooz, CEO of Digital Asset Yuval Rooz
  • Jon Frost, Senior Economist at the Bank for International Settlements Jon Frost
  • Jennifer Lassiter, Executive Director of the U.S. Federal Reserve's Digital Dollar Project Jennifer Lassiter

According to CoinDesk, during the panel discussion, most participants believed that SWIFT would still exist in five years, except for Mastercard CEO Michael Miebach, who expressed doubts about SWIFT's future as the dominant system for cross-border payment transfers. He stated:

If there were a payment system that could attach the relevant data a company needs, reduce payment costs, and enhance productivity, that's the mechanism we should aspire to, that's the real goal of a payment system.

A Mastercard spokesperson clarified Michael Miebach's remarks to CoinDesk after the event:

There is no black-and-white answer to whether SWIFT will survive, Michael wanted to emphasize that continued development by SWIFT will see the system evolve in different forms in the future, beyond just being the communication infrastructure for fund transfers.