Financial messaging system SWIFT has laid out its blueprint for a global central bank digital currency (CBDC) network following an eight-month experiment on different technologies and currencies.

The trial, which involved France and Germany's national central banks as well as global lenders like HSBC, Standard Chartered and UBS, looked at how CBDCs could be used internationally and even converted into fiat money if needed.

Around 90 per cent of the world's central banks are now using, trialling or looking into CBDCs. Most don't want to be left behind by bitcoin and other cryptocurrencies, but are grappling with technological complexities.

SWIFT's head of innovation Nick Kerigan said its trial, which will be followed by more advanced testing over the next year, resembled a bicycle wheel where 14 central and commercial banks in total connected spoke-like into its main hub.

The idea is that once scaled up, banks may need only one main global connection, rather than thousands if they were to set up connections with each counterpart individually.

"We believe that the number of connections needed is much fewer," Kerigan said. "Therefore, you are likely to have fewer breaks (in the chain) and you are likely to achieve greater efficiency."

The trial also tested different underlying CBDC technologies known as Distributed Ledger Technologies. The use of various technologies has also been raised as a potential hurdle for rapid global adoption.

There was a separate trial too carried out alongside Citi, clearing house Clearstream and Northern Trust on 'tokenised' assets, traditional assets like stocks and bonds transformed into digital tokens that can then be issued and traded in real-time.

Some countries such as the Bahamas and Nigeria already have CBDC's up and running. China is well advanced with real-life trials of an e-yuan, while central bank umbrella group, the Bank for International Settlements has also been running cross-border trials.

SWIFT's main advantage though is that its existing network is already usable in over 200 countries and connects more than 11,500 banks and funds.

The Belgium-based firm has gone from being virtually unknown outside banking circles to a household name this year after it cut most of Russia's banks off from its network as part of the West's sanctions for the country's invasion of Ukraine.

Kerigan said that kind of move could also happen in a new CBDC system, but doubted whether it would stop countries from joining one.

"Ultimately what most central banks are looking to do is to provide us with a CBDC for the people, the businesses and the organisations in their jurisdiction."

"So a solution that's fast and efficient and that gains access to as many other countries as possible would seem to be an attractive one."

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Financial messaging system SWIFT has laid out its blueprint for a global central bank digital currency (CBDC) network following an eight-month experiment on different technologies and currencies.

Financial messaging system SWIFT has laid out its blueprint for a global central bank digital currency (CBDC) network following an eight-month experiment on different technologies and currencies. The trial, which involved France and Germany's national central banks as well as global lenders like HSBC, Standard Chartered and UBS, looked at how CBDCs could be used internationally and even converted into fiat money if needed. Around 90 per cent of the world's central banks are now using, trialling or looking into CBDCs. Most don't want to be left behind by bitcoin and other cryptocurrencies, but are grappling with technological complexities. SWIFT's head of innovation Nick Kerigan said its trial, which will be followed by more advanced testing over the next year, resembled a bicycle wheel where 14 central and commercial banks in total connected spoke-like into its main hub. The idea is that once scaled up, banks may need only one main global connection, rather than thousands if they were to set up connections with each counterpart individually. "We believe that the number of connections needed is much fewer," Kerigan said. "Therefore, you are likely to have fewer breaks (in the chain) and you are likely to achieve greater efficiency." The trial also tested different underlying CBDC technologies known as Distributed Ledger Technologies. The use of various technologies has also been raised as a potential hurdle for rapid global adoption. There was a separate trial too carried out alongside Citi, clearing house Clearstream and Northern Trust on 'tokenised' assets, traditional assets like stocks and bonds transformed into digital tokens that can then be issued and traded in real-time. Some countries such as the Bahamas and Nigeria already have CBDC's up and running. China is well advanced with real-life trials of an e-yuan, while central bank umbrella group, the Bank for International Settlements has also been running cross-border trials. SWIFT's main advantage though is that its existing network is already usable in over 200 countries and connects more than 11,500 banks and funds. The Belgium-based firm has gone from being virtually unknown outside banking circles to a household name this year after it cut most of Russia's banks off from its network as part of the West's sanctions for the country's invasion of Ukraine. Kerigan said that kind of move could also happen in a new CBDC system, but doubted whether it would stop countries from joining one. "Ultimately what most central banks are looking to do is to provide us with a CBDC for the people, the businesses and the organisations in their jurisdiction." "So a solution that's fast and efficient and that gains access to as many other countries as possible would seem to be an attractive one." WATCH WION LIVE HERE:

After a 8-month experiment, SWIFT lays out blueprint for central bank digital currency network

Russia is looking for potential alternatives of the&nbsp;SWIFT international payments network after the West imposed&nbsp;the most crippling financial penalties yet on the country over its unrelenting invasion of Ukraine.

The decision, announced as Ukrainian forces battle to hold Russian forces back, has the potential to spread the pain of Western retaliation for President Vladimir Putin’s invasion to ordinary Russians far more than previous rounds of penalties.

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“Putin embarked on a path aiming to destroy Ukraine, but what he is also doing, in fact, is destroying the future of his own country,” EU Commission President Ursula von der Leyen said.

If fully carried out as planned, the measures will severely damage the Russian economy and markedly constrain its ability to import and export goods.

The US and European allies announced the moves in a joint statement as part of a new round of financial sanctions meant to “hold Russia to account and collectively ensure that this war is a strategic failure for Putin.”

Also see |&nbsp;<a href="https://www.wionews.com/photos/why-ukraine-has-been-able-to-stall-russian-advance-460209">Why Ukraine has been able to stall Russian advance?</a>

The central bank restrictions target access to the more than $600 billion in reserves that the Kremlin has at its disposal, and are meant to block Russia’s ability to support the ruble as it plunges in value amid tightening Western sanctions.

Russia's removal from the SWIFT payments system has been described as a "financial nuclear weapon" because of the damage it would cause to Russia as well as its trading partners.

Putin has sold the economic sanctions as an opportunity for Russia to produce its own goods.

Here are potential alternatives of SWIFT:

Russian messaging platform

Russian banks could move to a messaging system developed by Russia's central bank - System for Transfer of Financial Messages (SPFS). Last year, the central bank was reported as saying domestic interbank traffic could easily be transferred to this platform.

However, it only operates during weekday working hours, while SWIFT operates 24 hours a day, every day. Also, SPFS messages have size limitations potentially making it less able to handle more complex transactions. The SPFS system also lacks international connectivity.

Russian banks could in theory use SPFS messaging to send international payments to a connected bank in one of the countries that belong to the network. This bank could then use SWIFT to pipe the instruction into the international banking system, said Alistair Milne, Professor of Financial Economics at Loughborough University.

But a sudden surge in transactions via such a route would be likely to attract the attention of international regulators, thereby deterring the non-Russian partner bank from continuing this activity.

Professor Markos Zachariadis of University of Manchester, author of a book on SWIFT, said even if regulators did not take action, the banks could soon find themselves ostracised by Western banks, which have grown wary of engaging in activity seen as undermining sanctions.

Also read |&nbsp;<a href="https://www.wionews.com/world/fears-of-energy-war-between-russia-west-grows-whats-at-stake-460104">Fears of energy war between Russia, West grow. What’s at stake?</a>

China’s CIPS system

Another possible response to a SWIFT ban would be for Russian banks to connect to China’s CIPS payment platform. However, China’s platform can only be used for settling payments in yuan.

Analysts at Morgan Stanley said only 1.9 per cent of international payments are made in the Chinese currency, against around 40 per cent for US dollars, which limited the effectiveness of CIPS as a method for funding cross-border trade.

Also, since CIPS itself relies on the SWIFT network for its operations, piggybacking on CIPS could also be seen as a breach of a SWIFT ban, analysts said.

Indirect CIPs participants still need to go through SWIFT to complete settlements.

Also read |&nbsp;<a href="https://www.wionews.com/world/explainer-letter-z-turns-symbol-to-show-support-for-ukraines-invasion-in-russia-what-does-it-mean-460194" hreflang="en">Explainer: Letter 'Z' turns symbol to show support for Russia’s invasion of Ukraine. What does it mean?</a>

Bespoke, bilateral systems

A more suitable SWIFT alternative for Russian banks would be to set up bespoke, bilateral systems using phones, faxes or messaging Apps with an overseas partner who would take payment from importers of Russian goods and make payments to exporters to Russia.

Such a system was created by one foreign lender when Iran was cut off from the SWIFT network by sanctions tied to its nuclear programme, a former SWIFT executive familiar with the matter said.

This required a small team of people processing payments on the basis of sending two faxes and making two phone calls for each transaction.

But however effective, such systems are also prone to error and face security challenges. While SWIFT is plugged straight into a bank’s systems, faxes or WhatsApp messages may involve a manual transfer of data.

Errors and the necessity for extra checks to avoid them would raise costs and could make smaller ticket transactions uneconomic, industry experts said.

&nbsp;

(With inputs from agencies)

Russia is looking for potential alternatives of the SWIFT international payments network after the West imposed the most crippling financial penalties yet on the country over its unrelenting invasion of Ukraine.

Russia is looking for potential alternatives of the SWIFT international payments network after the West imposed the most crippling financial penalties yet on the country over its unrelenting invasion of Ukraine. The decision, announced as Ukrainian forces battle to hold Russian forces back, has the potential to spread the pain of Western retaliation for President Vladimir Putin’s invasion to ordinary Russians far more than previous rounds of penalties. “Putin embarked on a path aiming to destroy Ukraine, but what he is also doing, in fact, is destroying the future of his own country,” EU Commission President Ursula von der Leyen said. If fully carried out as planned, the measures will severely damage the Russian economy and markedly constrain its ability to import and export goods. The US and European allies announced the moves in a joint statement as part of a new round of financial sanctions meant to “hold Russia to account and collectively ensure that this war is a strategic failure for Putin.” Also see | Why Ukraine has been able to stall Russian advance? The central bank restrictions target access to the more than $600 billion in reserves that the Kremlin has at its disposal, and are meant to block Russia’s ability to support the ruble as it plunges in value amid tightening Western sanctions. Russia's removal from the SWIFT payments system has been described as a "financial nuclear weapon" because of the damage it would cause to Russia as well as its trading partners. Putin has sold the economic sanctions as an opportunity for Russia to produce its own goods. Here are potential alternatives of SWIFT: Russian messaging platform Russian banks could move to a messaging system developed by Russia's central bank - System for Transfer of Financial Messages (SPFS). Last year, the central bank was reported as saying domestic interbank traffic could easily be transferred to this platform. However, it only operates during weekday working hours, while SWIFT operates 24 hours a day, every day. Also, SPFS messages have size limitations potentially making it less able to handle more complex transactions. The SPFS system also lacks international connectivity. Russian banks could in theory use SPFS messaging to send international payments to a connected bank in one of the countries that belong to the network. This bank could then use SWIFT to pipe the instruction into the international banking system, said Alistair Milne, Professor of Financial Economics at Loughborough University. But a sudden surge in transactions via such a route would be likely to attract the attention of international regulators, thereby deterring the non-Russian partner bank from continuing this activity. Professor Markos Zachariadis of University of Manchester, author of a book on SWIFT, said even if regulators did not take action, the banks could soon find themselves ostracised by Western banks, which have grown wary of engaging in activity seen as undermining sanctions. Also read | Fears of energy war between Russia, West grow. What’s at stake? China’s CIPS system Another possible response to a SWIFT ban would be for Russian banks to connect to China’s CIPS payment platform. However, China’s platform can only be used for settling payments in yuan. Analysts at Morgan Stanley said only 1.9 per cent of international payments are made in the Chinese currency, against around 40 per cent for US dollars, which limited the effectiveness of CIPS as a method for funding cross-border trade. Also, since CIPS itself relies on the SWIFT network for its operations, piggybacking on CIPS could also be seen as a breach of a SWIFT ban, analysts said. Indirect CIPs participants still need to go through SWIFT to complete settlements. Also read | Explainer: Letter 'Z' turns symbol to show support for Russia’s invasion of Ukraine. What does it mean? Bespoke, bilateral systems A more suitable SWIFT alternative for Russian banks would be to set up bespoke, bilateral systems using phones, faxes or messaging Apps with an overseas partner who would take payment from importers of Russian goods and make payments to exporters to Russia. Such a system was created by one foreign lender when Iran was cut off from the SWIFT network by sanctions tied to its nuclear programme, a former SWIFT executive familiar with the matter said. This required a small team of people processing payments on the basis of sending two faxes and making two phone calls for each transaction. But however effective, such systems are also prone to error and face security challenges. While SWIFT is plugged straight into a bank’s systems, faxes or WhatsApp messages may involve a manual transfer of data. Errors and the necessity for extra checks to avoid them would raise costs and could make smaller ticket transactions uneconomic, industry experts said. (With inputs from agencies)

Here are the alternatives Russia can use as allies deploy 'financial nuclear weapon'

The EU's official journal said on Wednesday that seven Russian banks will no longer be part of the SWIFT network. The move is the result of sanctions over Russia's invasion of Ukraine.

SWIFT has also notified that they will be complying with the EU's instructions.

"To this end, in compliance with the legal instruction in &nbsp;EU Council Regulation (EU) 2022/345 of 1 March 2022, we will disconnect seven designated Russian entities (and their designated Russia based subsidiaries) from the SWIFT network. This Regulation requires us to disconnect the identified entities on 12 March 2022, and we will do so accordingly."&nbsp;

Also read |&nbsp;<a href="https://www.wionews.com/world/ukraine-invasion-united-states-treasury-bans-transactions-with-russias-central-bank-457505">Ukraine invasion: United States Treasury bans transactions with Russia’s Central Bank</a>

The banks, which have been given 10 days to discontinue SWIFT services, include Russia's second-largest bank, VTB, as well as Bank Otkritie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank and VEB.

As a senior EU official explained, the banks on the list were selected based on their connections to the Russian state, with public banks already subject to sanctions following Russia's annexation of Crimea in 2014.

"All these banks that we have listed under SWIFT... they are all based on their connection to the state and the implicit connection to the war effort. We have not gone for a blanket ban across the whole banking system," the official said.

Also read |&nbsp;<a href="https://www.wionews.com/world/swift-has-the-power-to-put-russia-on-back-foot-but-what-is-it-actually-456396">‘SWIFT’ has the power to put Russia on back foot. But what is it actually?</a>

The list does not include Sberbank, Russia's largest lender, and Gazprombank. This is because these companies handle most of the payments for Russian oil and gas, which EU countries are still buying despite the conflict.

The EU official said it was not possible simply to allow energy-related transactions and exclude others as SWIFT was unable to differentiate between types of payments. The official added that these two banks were nevertheless subject to other measures.

Watch |&nbsp;Russia-Ukraine Conflict: Moscow trying to install puppet regime in Ukraine?

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On Saturday, the European Union, the United States, Britain, and Canada blocked certain Russian banks from SWIFT, although they did not say which banks would be affected.

There is no clear global rival to SWIFT, a global payments network with over 11,000 members. EU officials said China has established a system, but it remains small, whereas SWIFT is still used for 70 per cent of transfers within Russia despite the existence of a Russian system.

If such systems existed, banks could still transfer funds via workarounds such as faxes and bilateral messaging systems.

(With inputs from agencies)

The EU's official journal said on Wednesday that seven Russian banks will no longer be part of the SWIFT network. The move is the result of sanctions over Russia's invasion of Ukraine.

The EU's official journal said on Wednesday that seven Russian banks will no longer be part of the SWIFT network. The move is the result of sanctions over Russia's invasion of Ukraine. SWIFT has also notified that they will be complying with the EU's instructions. "To this end, in compliance with the legal instruction in EU Council Regulation (EU) 2022/345 of 1 March 2022, we will disconnect seven designated Russian entities (and their designated Russia based subsidiaries) from the SWIFT network. This Regulation requires us to disconnect the identified entities on 12 March 2022, and we will do so accordingly." Also read | Ukraine invasion: United States Treasury bans transactions with Russia’s Central Bank The banks, which have been given 10 days to discontinue SWIFT services, include Russia's second-largest bank, VTB, as well as Bank Otkritie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank and VEB. As a senior EU official explained, the banks on the list were selected based on their connections to the Russian state, with public banks already subject to sanctions following Russia's annexation of Crimea in 2014. "All these banks that we have listed under SWIFT... they are all based on their connection to the state and the implicit connection to the war effort. We have not gone for a blanket ban across the whole banking system," the official said. Also read | ‘SWIFT’ has the power to put Russia on back foot. But what is it actually? The list does not include Sberbank, Russia's largest lender, and Gazprombank. This is because these companies handle most of the payments for Russian oil and gas, which EU countries are still buying despite the conflict. The EU official said it was not possible simply to allow energy-related transactions and exclude others as SWIFT was unable to differentiate between types of payments. The official added that these two banks were nevertheless subject to other measures. Watch | Russia-Ukraine Conflict: Moscow trying to install puppet regime in Ukraine? On Saturday, the European Union, the United States, Britain, and Canada blocked certain Russian banks from SWIFT, although they did not say which banks would be affected. There is no clear global rival to SWIFT, a global payments network with over 11,000 members. EU officials said China has established a system, but it remains small, whereas SWIFT is still used for 70 per cent of transfers within Russia despite the existence of a Russian system. If such systems existed, banks could still transfer funds via workarounds such as faxes and bilateral messaging systems. (With inputs from agencies)

Russia-Ukraine Crisis Day 8: SWIFT says will comply with EU instructions, disconnect 7 Russian banks

A previously undetected group of Russian-language hackers silently stole nearly $10 million from at least 18 mostly US&nbsp;and Russian banks in recent years by targeting interbank transfer systems, a Moscow-based security firm said on Monday.

Group-IB warned that the attacks, which began 18 months ago and allow money to be robbed from bank automated teller machines (ATMs), appear to be ongoing and that banks in Latin America could be targeted next.

The first attack occurred in the spring of 2016 against First Data&#39;s &quot;STAR&quot; network, the largest US&nbsp;bank transfer messaging system connecting ATMs at more than 5,000 organisations, Group-IB researchers said in a 36-page report.

The firm said it was continuing to investigate a number of incidents where hackers studied how to make money transfers through the SWIFT banking system while stopping short of saying whether any such attacks had been carried out successfully.

SWIFT said in October that hackers were still targeting its interbank messaging system, but security controls instituted after last year&rsquo;s $81 million heist at Bangladesh&rsquo;s central bank had thwarted many of those attempts.&nbsp;

Group-IB has dubbed the hacker group &quot;MoneyTaker&quot; after the name of software it used to hijack payment orders to then cash out funds through a network of low-level &quot;money mules&quot; who were hired to pick up money from automated teller machines.

The security researchers said they had identified 18 banks who were hit including 15 across 10 states in the United States, two in Russia and one in Britain. Beside banks, financial software firms and one law firm were targeted.

The average amount of money stolen in each of 14 US&nbsp;ATM heists was $500,000 per incident. Losses in Russia averaged $1.2 million per incident, but one bank there managed to catch the attack and return some of the stolen funds, Group-IB said.

Hackers also stole documentation for OceanSystems&rsquo; Fed Link transfer system used by 200 banks in Latin America and the United States, it said. In addition, they successfully attacked the Russian interbank messaging system known as AW CRB.

Once hackers penetrated targeted banks and financial organisations, they stole internal bank documentation in order to mount future ATM attacks, Group-IB said. In Russia, the hackers continued to spy on bank networks after break-ins, while at least one US&nbsp;bank had documents robbed twice, it said.

Group-IB said it had notified Interpol and Europol in order to assist in law enforcement investigations.

The unidentified hackers used a mix of constantly changing tools and tactics to bypass anti-virus and other traditional security software while being careful to eliminate traces of their operations, helping them to go largely unnoticed. To disguise their moves, hackers used security certificates from brands such as Bank of America, the Fed, Microsoft, and Yahoo.

They stole nearly $10 million from at least 18 mostly US?and Russian banks in recent years by targeting interbank transfer systems, a Moscow-based security firm said on Monday

A previously undetected group of Russian-language hackers silently stole nearly $10 million from at least 18 mostly US and Russian banks in recent years by targeting interbank transfer systems, a Moscow-based security firm said on Monday. Group-IB warned that the attacks, which began 18 months ago and allow money to be robbed from bank automated teller machines (ATMs), appear to be ongoing and that banks in Latin America could be targeted next. The first attack occurred in the spring of 2016 against First Data's "STAR" network, the largest US bank transfer messaging system connecting ATMs at more than 5,000 organisations, Group-IB researchers said in a 36-page report. The firm said it was continuing to investigate a number of incidents where hackers studied how to make money transfers through the SWIFT banking system while stopping short of saying whether any such attacks had been carried out successfully. SWIFT said in October that hackers were still targeting its interbank messaging system, but security controls instituted after last year’s $81 million heist at Bangladesh’s central bank had thwarted many of those attempts. Group-IB has dubbed the hacker group "MoneyTaker" after the name of software it used to hijack payment orders to then cash out funds through a network of low-level "money mules" who were hired to pick up money from automated teller machines. The security researchers said they had identified 18 banks who were hit including 15 across 10 states in the United States, two in Russia and one in Britain. Beside banks, financial software firms and one law firm were targeted. The average amount of money stolen in each of 14 US ATM heists was $500,000 per incident. Losses in Russia averaged $1.2 million per incident, but one bank there managed to catch the attack and return some of the stolen funds, Group-IB said. Hackers also stole documentation for OceanSystems’ Fed Link transfer system used by 200 banks in Latin America and the United States, it said. In addition, they successfully attacked the Russian interbank messaging system known as AW CRB. Once hackers penetrated targeted banks and financial organisations, they stole internal bank documentation in order to mount future ATM attacks, Group-IB said. In Russia, the hackers continued to spy on bank networks after break-ins, while at least one US bank had documents robbed twice, it said. Group-IB said it had notified Interpol and Europol in order to assist in law enforcement investigations. The unidentified hackers used a mix of constantly changing tools and tactics to bypass anti-virus and other traditional security software while being careful to eliminate traces of their operations, helping them to go largely unnoticed. To disguise their moves, hackers used security certificates from brands such as Bank of America, the Fed, Microsoft, and Yahoo.

Hackers hit major ATM network after US, Russian bank breaches: Report