Global banking messaging network SWIFT has revealed the results of the second phase of hourglass testing for its Central Digital Currency Link (CBDC) solution, which is called a connector. The project examined four use cases, some of which did not involve CBDC, according to the test results report. It experimented with digital trading with an atomic (instant) exchange facility through smart contracts.
It has also connected tokenization platforms to facilitate establishment against payment, and worked with financial services group CLS to demonstrate the connector’s ability to connect existing currency exchange infrastructures using CBDC. The fourth use case, involving the use of its liquidity backup mechanism algorithms to reduce liquidity fragmentation across platforms, was described as a “paper exercise, accompanied by bilateral discussions”. The project used R3’s Corda and the Hyperledger Fabric and Besu blockchain platforms.
Successful hourglass tests
With the end of hourglass testing, SWIFT plans to continue development of the beta version of its connector, focusing on the implementation of smart contracts on networks, cryptographic key and token release on networks, and data retention and token programmability on networks. Over 125 users performed more than 750 transaction simulations to demonstrate complex use cases for the SWIFT CBDC interlinking solution.
Participants in the second phase hourglass included ANZ, Citibank, Deutsche Bank, DTCC, HSBC, Société Générale, Standard Chartered, Sumitomo Mitsui and Shanghai Commercial & Savings Bank, as well as at least seven central banks or monetary authorities. Testing began in September, and SWIFT completed the first phase of testing in March 2023.
Outlook for the future
SWIFT is actively seeking new use cases. It is working on a data research network to identify user needs and issues, and has also announced its intention to create a research and development working group for central digital currency and instant payment solutions.
Conclusion
The success of SWIFT’s second phase of hourglass testing for its central digital money link solution demonstrated the connector’s ability to connect existing financial infrastructures and facilitate atomic transactions using smart contracts. SWIFT has continued to develop the beta version of its connector, focusing on the implementation of smart contracts on networks, cryptographic key and token release on networks, and data retention and programmability of tokens on networks.
