Amid the growing adoption of cryptocurrencies, more countries and banks have begun to take measures that could pave the way for implementing a central bank digital currency (CBDC), allowing them to regulate digital currencies easily.
In a post on LinkedIn on April 14, Nick Kerigan, the Managing Director and Head of Innovation at SWIFT, discussed the growing interest in CBDCs around the world, with a myriad of countries now exploring their own.
Meanwhile, central banks around the globe have also increased their efforts to develop CBDCs, in part to improve the efficiency of current payment systems and to address the challenges presented by cryptocurrencies.
Kerigan mentioned that he had delivered a keynote speech at Finovate Europe in March that CBDCs could be a major force in the near future.
“Interest in CBDCs has been steadily growing over the past few years, with central banks across 87 different counties already exploring their own. Together, those countries make up more than 90% of global GDP, indicating that regulated digital currencies could be a major force in the not-so-distant future, he said.”
All CBCDs need to be connected
Kerigan recognized that, although it is encouraging to see so much interest in this field, the fact is that each new digital currency is built on a unique combination of technologies, standards, and protocols.
The Managing Director argued if companies and consumers are to utilize them for cross-border payments, “the need to prevent fragmentation and ensure they are all connected becomes more and more important.”
“As an integral part of the global financial system and a critical provider of network and mutual services, we’re uniquely placed to offer a solution to this challenge.”
Following a number of successful pilot projects last year, SWIFT is continuing to investigate its potential role in the space.
Its studies are intended to illustrate how our platform might facilitate the interconnection of CBDC and real-time gross settlement networks, as well as the smooth coordination of CBDC cross-border transactions.