The global march toward central bank digital currencies (CBDCs) is well underway, with close to 90% of central banks now involved in the process of creating digital versions of their money. Those digital currencies are about to have a major catalyzation toward reality thanks to SWIFT’s recent announcement that it will be looking to tie all of the world’s CBDCs together under one platform within the next two years – in a move that spells good news for not only centralized digital currencies, but decentralized ones, too.
While individual CBDCs – including those already launched by Jamaica, Nigeria, and the Bahamas – represent a gradual shift in acceptance of digital currencies, having SWIFT come on board will serve to dramatically accelerate global adoption. With a network of interconnected CBDCs, SWIFT will continue to be the focal point of currency exchange – and that’s exactly where they want to be.
“Our view is that a common connectivity layer is critical to eliminating friction and enabling interoperability between the existing financial system and blockchains to create a unified global market,” writes SWIFT. Importantly, by making it easier to trade between CBDCs, SWIFT will be creating infrastructure that better improves the trading process for all digital currencies.
It also indicates that banks around the world will be holding crypto of different types for users (as some already do), signifying that we are indeed on the cusp of widespread institutional adoption. After all, SWIFT represents a network of more than 11,500 banks, each of which will have digital currency trading capacity after the launch of the new system.
Of course, it’s important to note that CBDCs are critically different from Bitcoin and other altcoins in one key way: they’re not decentralized, and they never will be. That’s generally a deal breaker for crypto users who got on board because they are looking for an alternative to central bank currencies (aka fiat currencies). Even if it’s in digital form, after all, a fiat currency is still entirely subject to the whims of a central bank and its government.
Regardless of whether any given user prefers CBDCs, Bitcoins, or altcoins, however, the fact remains that a giant leap forward is happening to create a system capable of trading digital currencies. The most recent six-month trial is described as one of the “largest global collaborations on CBDCs and ‘tokenised’ [sic] assets to date,” demonstrating the significance of SWIFT’s determined efforts.
There are many good reasons for SWIFT to be so doggedly engaged in getting the system up and running – not the least of which is preparing to capture near-future profits. According to research from the Boston Consulting Group, approximately $16 trillion of assets will be tokenized within the next half decade (by 2030). By having its network ready to trade those assets, SWIFT will be ready and able to collect fees from each and every transaction.
For cryptocurrency investors, SWIFT’s efforts to bring the CBDCs online and connect them together is great news – as it firmly solidifies blockchain-based currencies and their global role in the coming years.
