Swiss Central Bank Delays CBDC Pilot by Two Years
The Swiss National Bank (SNB) announced on June 20 an extension of its wholesale central bank digital currency (CBDC) pilot program, also known as the “digital franc.”
The expansion will gradually incorporate more financial institutions while evaluating the digital franc’s performance and security in real-world scenarios.
Extension of Swiss CBDC Pilot
SNB governing board member Antoine Martin revealed that Switzerland postponed the initial pilot date for June 30 by approximately two years until at least 2026.
Today's #Fintech Digest includes the Swiss National Bank (SNB) continuing its Project Helvetia pilot focusing on tokenized securities settlement on SIX Digital Exchange (SDX) in Swiss franc wholesale #CBDC for at least two more years. https://t.co/sIZD0i3wQI pic.twitter.com/oiJLqiUexq
— John Kiff (@Kiffmeister) June 20, 2024
The Swiss CBDC pilot is specifically focused on wholesale applications designed for use between financial institutions rather than retail consumers. This approach differs from retail CBDC pilots in countries like China, where the digital yuan is intended for use by the general public.
Martin emphasized that the wholesale CBDC “can be made available for a wider range of financial transactions.” The pilot currently involves six commercial banks, including UBS Group AG and Commerzbank AG, working in partnership with Swiss stock exchange provider SIX.
Martin argued that the project’s future success hinges on two key factors: attracting new financial market participants and boosting transaction volume. He also highlighted the importance of settling more financial market transactions on the platform.
Martin cautioned that this extension does not guarantee the permanent introduction of wholesale CBDC or digital SNB Bills, however.
As it stands, the digital franc has demonstrated some practical utility during its testing. The SNB, for example, has issued blockchain-based digital currency for institutional use only, allowing financial institutions to use the tokenized asset for transactions with the central bank.
The Swiss National Bank is working on a wholesale CBDC with SIX Digital Exchange and six commercial banks. The pilot named, Helvetia Phase 3, will establish a tokenized Swiss Franc that will act as the settlement instrument between financial institutions for digital securities… pic.twitter.com/khBfx9h1LJ
— XRPDAILY (@XRPXLMVERSE) November 15, 2023
Moreso, the digital franc has been used to settle at least five bond issuances on SIX’s digital exchange in Zurich, with a major milestone reached in a $226 million settlement for a World Bank bond earlier this month.
The Role of BIS Innovation Hub in CBDC Development
The Bank for International Settlements (BIS) is a known key player in the global advancement of Central Bank Digital Currency (CBDC) initiatives.
Through its Innovation Hub, the BIS makes collaboration among central banks worldwide easy and drives research and development in digital currencies and financial technology innovation.
The Swiss National Bank, the Banque de France, and the BIS Innovation Hub launched Project Jura back in 2021 to focus on wholesale CBDCs (wCBDCs) for cross-border settlements.
Project Dunbar also brings together multiple central banks to develop prototypes for a shared platform enabling international settlements using multi-CBDCs.
Recall that the BIS revealed in January 2024 that its CBDC project is entering a new phase. The Aurum Project explores the privacy of payments in retail CBDCs. This is one of the six projects for 2024 that is being developed in the Innovation Hub work program.
The BIS is also working on Project mBridge, a multi-CBDC common platform for wholesale cross-border payments. This was after the Central Banks of China and the United Arab Emirates (UAE) signed an MoU to bolster digital currency cooperation.
Another noteworthy project is Mariana, a collaboration involving the central banks of France, Singapore, and Switzerland. The Mariana initiative explores the application of automated market makers (AMMs) for wholesale CBDC transactions across borders, leveraging decentralized finance (DeFi) technologies to transform cross-border payments.
