- Among different technology standards, SWIFT investigates CBDC compatibility.
- Bitcoin in China acknowledged as property, pending legal review.
The President of the Society for Worldwide Interbank Financial Telecommunication (SWIFT) China has offered his thoughts on the difficulties and potential solutions for cross-border central bank digital currency (CBDC) interoperability.
Wen Yang talked about the organization’s attempt to close technical gaps and the fragmentation in CBDC systems brought about by varied technological paths and standards among different economies in an interview with 21st Century Business Herald.
The study claims that more than 130 countries are investigating CBDCs, and around 70% of central banks want to issue them in the next ten years. The quick progress, in the meantime, can result in “data silos”—systems that are unable to talk to one another.
Yang underlined that there is a fragmentation problem that results in data silos because of the major variations in the technical paths and standards, including protocols, among economies. He added:
“Eleven countries have fully launched their CBDCs to date; others are in later stages of development.”
Global Development of CBDCÂ
China has implemented its digital yuan in a number of apps, while the European Central Bank is getting ready to launch a digital Euro. Commercial banks in India process a million digital rupee transactions per day.
In July 2023, Swift opened the second stage of its CBDC sandbox, which concentrated on intricate use cases in digital assets, digital trade, and foreign exchange networks for CBDC payments and settlements.
During the six-month research, 38 financial institutions from around the world—including regulators, commercial banks, and market infrastructures—applied seven distinct CBDCs.
Yang underlined that the utilization of CBDCs across borders depends critically on interoperability. The sandbox results validated SWIFT’s suggestion to streamline digital transactions while enabling financial institutions to keep using their current infrastructures.
Technically, trade payment automation has been demonstrated via tests on the interaction between digital trade platforms and CBDC networks using Distributed Ledger Technology (DLT) and smart contracts.
Swift intends to develop its CBDC connector solution to test larger use cases in a more complete setting. Addressing rising market demands includes improving support for cross-border payments and on-chain FX settlements.
Chinese Crypto as Property
Meanwhile, an ETHNews report that said bitcoin is regarded as property in China added yet another level of complexity to the world of digital currencies.
As such, legislation that forbids property crimes and judicial assessment applies to cryptocurrency holdings. This legal structure emphasizes the need of regulatory certainty in the developing field of digital assets.