The Swiss National Bank has completed testing the circulation of the digital franc in the financial system. They have teamed up with the major banks in the country to do the job.
Bloomberg reports that Switzerland’s central bank, the Swiss National Bank, has completed the second phase of testing the digital franc.
During a three-day test in December, five commercial banks implemented a wholesale version of the digital franc into their existing commercial architecture. These were UBS, Citigroup, Credit Suisse, Goldman Sachs and Hypothekarbank Lenzburg. The tests covered a wide range of digital currency transactions, including interbank, money and cross-border transfers.
The test was carried out as part of an experiment called “Project Helvetica”. Its objective is to identify the practical complexities, legal issues and policy implications of issuing a central bank digital currency (CBDC).
Digital Franc: no decision has been made
It remains to be seen whether the Swiss National Bank will launch a third test phase. It is also unclear whether Switzerland will decide on issuing a CBDC following the results of the second test phase of the digital franc.
Thomas Moser is a member of the Board of Governors of the Swiss National Bank. He noted in March that Switzerland would not be rushing to implement a digital currency. He said the digital version of money is significantly inferior to cash in terms of anonymity during payments.
According to Moser, data protection and privacy are highly valued in Switzerland. Cash is in demand because people can use it for “completely anonymous payment”. He also believes that replacing fiat currency with a digital counterpart would jeopardize the country’s two-tier banking system.
Moser also said bitcoin was originally something exciting in terms of idea and concept. However, as cryptocurrency has evolved, it has moved away from its original vision.
“Bitcoin was supposed to create a new financial system without intermediaries or central counterparties.”
However, as Moser notes, it has become clear that many “do not want to be their own bank at all and are happy to use the services of intermediaries and central counterparties”.
Switzerland is not a member of the EU but is part of the single market. Most businesses in Switzerland accept the euro alongside the Swiss franc. So it will be interesting to see the digital franc working alongside external fiat currencies.
Let’s look at this space!
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