The future belongs to evolution, and technology epitomises evolution. Let’s delve into an intriguing development that espouses this philosophy.
Recently, the bank messaging network SWIFT invited three central banks – The Hong Kong Monetary Authority, the Central Bank of Kazakhstan and another undisclosed bank, to partake in its central bank digital currency (CBDC) interoperability project. The project is presently in a beta phase expansion – in other words, it is still in the sandbox stage. Relaying transactions between over 11,500 financial institutions globally, SWIFT’s affiliation with CBDCs is one for the future books.
However, do the wheels of progress run smoothly? A pertinent concern is that CBDCs, as fresh elements in the financial market, could rival established platforms like SWIFT. This concern is exacerbated by the fact that the Bank for International Settlements is backing several CBDC projects. But healthy competition, as they say, is always a catalyst for innovation.
An affirmation of this is SWIFT’s recent declaration that it facilitates 89% of its transactions within an hour, surpassing the G20’s target for 75% hourly settlements by 2027. However, as it is usually the norm with technological advancements, there are a few hitches. Despite the impressive statistics, SWIFT acknowledges that due to factors like regulatory controls and working hours, only 60% of wholesale payments are concluded in an hour.
SWIFT’s amalgamation with CBDCs is a testament to the growing impact of digital currencies in the financial landscape. As the project continues to evolve, there are bound to be more fascinating conversations around this innovation, its potential consequences and the future of finance as we know it. The golden rule of evolution is, after all, adaptation. We are set to witness whether established financial institutions can adapt and thrive amidst the surge of digital currencies.
Source: Cointelegraph
