Overcoming Barriers in CBDC Systems: Insights from SWIFT China President, Wen Yang

SWIFT China President Wen Yang recently discussed the challenges and solutions for cross-border central bank digital currency (CBDC) interoperability in a recent interview. Yang highlighted the fragmentation in CBDC systems due to different technological paths and standards among economies and emphasized SWIFT’s efforts to bridge these gaps. Over 130 economies are currently exploring CBDCs, with nearly 70% of central banks planning to issue them in the next decade. However, the rapid development of CBDCs could result in “data silos” where systems cannot communicate with each other. Yang mentioned that 11 countries have fully launched their CBDCs, while others are in later stages of development. China’s digital yuan has been implemented across various applications, the European Central Bank is preparing for a digital Euro, and commercial banks in India handle one million digital rupee transactions daily. SWIFT launched the second phase of its CBDC sandbox to explore complex use cases in digital trade, digital assets, and foreign exchange networks for CBDC payments and settlements. The project involved 38 financial institutions from around the world and tested seven different CBDCs. Yang stressed the importance of interoperability in cross-border CBDC use and stated that tests on the interaction between digital trade platforms and CBDC networks using Distributed Ledger Technology (DLT) and smart contracts have proven technically feasible. SWIFT plans to expand its CBDC connector solution to test more extensive use cases and address growing market demands for on-chain forex settlements and cross-border payments.