The international payments network, in partnership with Capgemini, a French IT services company, is testing how to interlink domestic Central Bank Digital Currencies (CBDCs) for international payments.

Why should we care?
SWIFT and Capgemini seem to be taking Lana Swartz’s warning to heart. While CBDCs can make for a more regulated and centralized digital cash landscape than our current—highly volatile—one, CBDCs risk operating on different platforms that can’t speak to each other. This would force banks to develop their own “street smarts,” choosing certain networks and frameworks over others without regulatory guidance. “If left unaddressed, this fragmentation could lead to ‘digital islands’ springing up across the globe,” confirms Nick Kerigan, Head of Innovation at SWIFT. “Different systems and different CBDCs will need to be able to efficiently work together, or it will hamper the ability of businesses and consumers to make frictionless cross-border payments using CBDCs.” Granted, SWIFT and Capgemini aren’t doing this for purely altruistic reasons. They hope to become the de facto CBDC international payments rails by being the first contender out the gate. And, with 11,000 financial institutions from 200 countries already part of the SWIFT network, these two players have a considerable advantage over up-and-coming payments rails for this kind of currency. CBDCs may, in that regard, further consolidate the market share of existing payments institutions—avoiding a “wild west,” sure, but also keeping the same companies in power.