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Global banking system SWIFT is moving to the next phase of its central bank digital currency (CBDC) testing after positive results in the pilot stages.

The interbank network said its project to connect different nations’ CBDCs with one another offers “clear potential and value” in a statement on 9 March.

Lewis Sun, global head of domestic and emerging payments at HSBC, said: “While interest in CBDCs is growing, so is the risk of fragmentation as a widening range of technologies and standards is being experimented with.”

He added that the SWIFT project aims to bring about “faster, cheaper and more secure cross-border payments.”

The project, which includes banks such as the Royal Bank of Canada and Banque de France, will now move on to test applications of CBDCs, such as trade finance and securities settlements.

Over a period of 12 weeks, SWIFT says it successfully simulated close to 5,000 transactions between two different blockchains and existing fiat payment systems. More than 18 financial institutions participated in the project.

“Overall, the results of the sandbox testing found that SWIFT’s experimental interlinking solution can meet the needs of central and commercial banks for CBDCs interoperability, ensuring CBDCs can be successfully used in cross-border payments.”

SWIFT also said that there was a “strong degree of alignment” amongst participating institutions as to the future implementation of any CBDC collaboration.

The OMFIF Digital Monetary Institute expects a quarter of central banks to develop a CBDC solution within the next few years.

Countries like Nigeria and the Bahamas have already issued digitised versions of their national currency, and governments such as the UK and European Union are exploring the technology.

More than 110 central banks around the world are researching the use cases for CBDCs.