Swift says experiment shows CBDC use cases

The Swift financial transactions and payments network said its latest experiment with a central bank digital currency successfully demonstrated the use of CBDCs in digital trade, payments, and tokenized foreign-exchange and asset networks.

Details: Swift said it worked with 38 global institutions—not including the Federal Reserve—in the second phase of testing for its CBDC interlinking solution to facilitate interoperability between digital currencies and tokenized assets. Swift said the testing helped demonstrate how to automate complex workflows for cross-border trade payments to settle preauthorized payments.

Planned Launch: Swift’s head of innovation, Nick Kerigan, told Reuters the network plans to launch its CBDC solution in the next 12-24 months, though that timeline could shift if major economies delay the launch of CBDCs.

ICBA FOIA Request: ICBA last week filed a Freedom of Information Act request with U.S. agencies seeking federal records related to whether legislative changes are required to issue a U.S. CBDC. ICBA noted that a 2022 executive order required a federal report that has never been made public.

U.S. State of Play: The Fed is researching the merits of a U.S. CBDC while Congress determines whether to permit the Fed to issue a digital dollar. Fed Chair Jerome Powell has repeatedly said congressional authorization is needed for his agency to issue a CBDC.

ICBA View: ICBA has repeatedly expressed opposition to the creation of a U.S. CBDC and supports the CBDC Anti-Surveillance State Act (S. 3801/H.R. 5403), which would prohibit the Federal Reserve Banks from offering products or services—including CBDCs—directly to individuals.