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Swift, the global financial messaging giant, has announced progress in its testing of a CBDC interoperability solution. The company has been collaborating with the financial community to develop a solution enabling CBDCs to be used cross-border and move between DLT-based and fiat-based systems using the existing economic infrastructure.
Swift has tested the solution in a sandbox environment with 18 central and commercial banks, including the Banque de France, the Deutsche Bundesbank, and the Monetary Authority of Singapore. Following positive feedback, Swift plans to develop a beta version of the solution for payments in the coming months. A second phase of sandbox testing will also focus on new use cases, including cross-asset exchange, trade finance, and conditional payments.
Meanwhile, Ripple sponsored a CBDC Innovate Challenge in 2022, encouraging developers to build CBDC applications using Ripple’s technology in three categories: retail, interoperability, and financial inclusion. SpendTheBits (STB), a retail payment solution built on the XRP Ledger, allows users to make payments in multiple currencies, including CBDCs, cryptocurrencies, and stablecoins.
Swift’s progress in CBDC interoperability testing represents a significant challenge to Ripple’s dominance in cross-border payments. However, Ripple’s focus on developing CBDC applications using its technology shows that the competition in this area is heating up. It remains to be seen how the battle for market share will play out in the coming years.