Global CBDC development should strengthen community cooperation to avoid data islands

Digital ruble, digital pound, digital RMB... In recent years, countries around the world have taken frequent actions in launching the Central Bank Digital Currency (CBDC). A report released by the Bank for International Settlements (BIS) in 2022 shows that 90% of the world's central banks are exploring CBDC, covering economies that account for more than 90% of global GDP. This trend will undoubtedly extend to the field of cross-border payment.
"Although countries are in the ascendant in promoting CBDC, we cannot foresee the role of CBDC in restructuring the cross-border trade and investment pattern." Yang Wen, president of Swift China, said that Swift, as a neutral inter-bank cooperation organization serving more than 11000 member institutions around the world, has the vision of realizing real-time, friction-free cross-border transactions between 4 billion accounts worldwide, "All along, we have spared no effort to support any innovation and measures that help promote global economic development and cross-border transactions."
Yang Wen said that the development of CBDC is in full swing, and many countries around the world are actively participating in relevant projects. However, due to the different actual conditions of each country, the CBDC strategies formulated and deployed by the central banks of each country are significantly different, and the digital currency of each country is also issued and managed based on different technologies, standards and agreements. A direct impact is that the global CBDC ecosystem may become increasingly fragmented. If this problem is not solved, it may even lead to the emergence of "data islands", and enterprises and consumers will not be able to use CBDC for friction-free cross-border payment.
"To solve the increasingly prominent problem of CBDC fragmentation and give full play to the potential of CBDC in cross-border transactions, the key is to realize the interconnection between different CBDCs and between CBDC systems and existing non-CBDC systems," Yang Wen said,
Swift is an important participant in the global cross-border payment field, and has natural advantages in solving the challenges brought by the global fragmentation of CBDC.
In order to promote the application of CBDC in global trade and address the challenges of fragmentation, Swift has been working with the financial community to find innovative solutions. For example, in 2021, Swift and its partners tested the business process of cross-border payment through CBDC "between traditional payment systems and CBDC systems" and "between two CBDC systems". Based on the test in 2021, Swift will continue to explore the interconnection scheme that meets the requirements of BIS Multi-CBDC Model 2 in 2022, and support the barrier-free interaction between CBDCs based on different paths and technologies by providing standard and unified connector gateways for different payment systems or networks.
Yang Wen analyzed that the success of these two experiments proved the technical feasibility of Swift's CBDC interconnection solution, that is, through the adoption of unified standards and the use of connector gateways in their respective networks, the interaction between different networks can be realized, greatly simplifying the interconnection between CBDC network and other financial networks.
"For projects like CBDC that need to bridge multiple communities, community collaboration is particularly important. Therefore, Swift's unique advantages in this field are also very important. The market needs an environment that allows all parties of the financial community to participate, test and cooperate with customers in an open and innovative way. To this end, Swift has built a CBDC sandbox and visual interface. At present, there are 18 institutions in the world, including central banks and market infrastructure And commercial banks are using the sandbox to evaluate potential use cases and broader CBDC interactivity. " Yang Wen said that Swift will continue to conduct experiments and exploration in the field of CBDC.
For some time, the exploration of CBDC in Asian countries has been at the forefront. The central banks of Asian countries, including China, are very active in promoting the development of CBDC. Yang Wen expressed his appreciation and support for this, and Swift welcomed and supported any measures that could promote global trade, world economic development and improve social welfare. He said that compared with developed economies, developing economies may have the advantages of fast start and high flexibility in the research and development of CBDC projects. Swift very much hopes to carry out close cooperation with the Chinese community on relevant projects in the process of vigorously promoting the development and application of CBDC in China.