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"Quant has developed Overledger DLT gateway - the world's first DLT gateway for enterprise that delivers interoperability across different systems, networks, and DLTs. Now, we're building on this platform to help enterprises, governments, and individuals, across the globe benefit from the true potential of an incredibly powerful technology. "

Celo's cLabs acquired the decentralized finance (DeFi) startup Summa, best known for making wrapped Ethereum tokens that can represent locked amounts of bitcoin. Summa's technical expertise in cross-chain architecture will enable seamless interoperability between Celo and various layer-one blockchains.

This speech by Tara Rice, Head of Secretariat, Committee on Payments and Market Infrastructures, focuses on three topics related to how CBDCs can help on the international dimension of payments: (i) a taxonomy to describe the different forms and elements of cross-border interoperability; (ii) the conceptual trade-off between cost and complexity on the one hand and benefits on the other (which in this case would be mainly in reducing the frictions of cross-border payments); and (iii) some thoughts on lessons learned and the way forward.

SWIFT and Chainlink will be collaborating with dozens of financial institutions to test how they can use Swift's infrastructure to instruct the transfer of tokenized assets across blockchains. This builds on a series of successful trials in 2022, and also will explore how the industry could address potential operational and regulatory pitfalls facing financial institutions when operating in blockchain environment.

The Reserve Bank of India (RBI) is reportedly planning to introduce new features to popularize the e-rupee retail central bank digital currency (CBDC), with transaction volumes running  way short of the RBI's end-2023 target (18,000/day versus a one million/day. The features include allowing digital rupee transactions when a customer is offline and linking the e-rupee to India's Unified Payments Interface (UPI). In fact, many banks have already gone live with QR code-based e-rupee UPI interoperability, so at least this doesn't seem to be new news. Also, HDFC Bank is reportedly working with IDEMIA to build an offline e-rupee platform for feature phones.

Chainalysis says cross-chain bridges that allow transfer of assets between independent blockchains are among the highest risk protocols in the blockchain industry for scams and bad actors. Chainalysis in a new report estimates that $2 billion worth of cryptocurrency has been stolen from cross-chain bridges across 13 attacks so far this year, accounting for 69% of all stolen funds during that time. Cross-chain bridges were once considered the solution to interoperability between blockchains in the crypto industry, but as the protocols continue to seem vulnerable to hacks and attacks that view is beginning to change.

The Reserve Bank of India Innovation Hub (RBIH) conducted a successful interoperable distributed ledger technology (DLT) platform proof-of-concept exercise with 11 banks, DLT fabric partners, DLT application layer partners, and fintech startups. Inland Letter of Credit was chosen as the use case, because its end-to-end flows is paper intensive, time consuming, requires human intervention at multiple level, and prone to fraud. DLT allowed stakeholders to digitally share accurate and reliable trade information in real-time. Smart contracts supported by DLT, allowed for automated execution of payments on meeting pre-set conditions of the contract.

The Bank of Tanzania is reportedly planning to roll out its new Tanzania Instant Payment System payment system in February, after trialing it with banks and mobile money operators. The interoperable system allows transfer of payments between different participating digital financial service providers. The system will reduce the need to use cash, and is expected to increase financial inclusion by improving access and usage of financial services in Tanzania.

SWIFT published the results of their experimental central bank digital currency (CBDC) interlinking solution in a sandbox environment with 18 central and commercial banks. It was successfully tested across almost 5,000 transactions between two different blockchain networks and a traditional fiat currency. SWIFT concluded that their solution can meet the needs of CBDC interoperability, ensuring CBDCs can be successfully used in cross-border payments.

"Swift has a long history of working with the financial services community to solve challenges and facilitate industry-wide innovation. We continue to demonstrate this by participating in industry initiatives such as the RLN, and by driving activities such as our recent central bank digital currency (CBDC) sandbox and blockchain interoperability experiments."

The Bank for International Settlements (BIS) published two Committee on Payments and Market Infrastructures (CPMI) reports that offer key insights and recommendations on the interlinking and interoperability of payment systems to enhance cross-border payments. The first report discusses design choices and the risk implications of interlinked fast payment systems (FPSs) and the role of application programming interfaces (APIs), setting out the key decisions for governance and outlines recommendations for their oversight. The second report presents ten recommendations to promote the harmonization of APIs to enhance cross-border payments. https://www.bis.org/cpmi/publ/d223.htm https://www.bis.org/cpmi/publ/d224.htm

"The Ripple development team has launched the first fiat InterLedger Protocol (ILP) connector, and it is expected to be a big step towards interoperability with traditional financial systems and gain massive adoption."

Digital Asset is collaborating with ISDA to develop a new tool that can support the use of smart contracts for derivatives trading. The collaboration focuses on creating interoperable technical solutions that advance standardization to allow for greater automation of derivatives trade management.

The World Economic Forum has teamed up with over 100 global supply chain and logistics leaders to standardize blockchain apps in the industry. The project aims to co-develop interoperable blockchain applications in the logistics industry and to leverage an open-source toolkit to deploy blockchain responsibly.

Sidechains are a unique and diverse solution for disparate blockchain networks to experiment and interact with each other. Developments within sidechains will go a long way in fueling better liquidity, interoperability, and scalability of the broader blockchain and cryptocurrency ecosystem.

A new initiative plans to make six of Europe's smartphone wallets interoperable with each other, creating a total network of 5 million users in 10 European countries. Notably, they are working with Chinese fintech giant Alipay to develop a unified QR code.

Thailand's central bank announced it is working with the Hong Kong Monetary Authority to develop interoperability among ledgers for cross-border funds transfer. The collaboration is part of the third phase of the Bank of Thailand's Project Inthanon.

"Central bankers should work to develop digital currency interoperability, and a system of decentralized exchange through which businesses in different countries can use smart contracts to create automated escrow agreements and protect themselves against exchange rate volatility."

The ongoing digital revolution may lead to a radical departure from the traditional model of monetary exchange. We may see an unbundling of the separate roles of money, creating fiercer competition among specialized currencies. On the other hand, digital currencies associated with large platform ecosystems may lead to a re-bundling of money in which payment services are packaged with an array of data services, encouraging differentiation but discouraging interoperability between platforms. Digital currencies may also cause an upheaval of the international monetary system: countries that are socially or digitally integrated with their neighbors may face digital dollarization, and the prevalence of systemically important platforms could lead to the emergence of digital currency areas that transcend national borders. Central bank digital currency ensures that public money remains a relevant unit of account.

A rapid shift towards digital payments can improve cost, transparency and convenience for billions of consumers. International cooperation is needed to support technological capacity in developing economies, ensure interoperability between national systems, enhance cross-border payments and remittances, and support financial inclusion - in short, to avoid spatial and social fragmentation.