The Swiss National Bank has successfully used a wholesale CBDC to settle transactions with five commercial banks, the monetary authority said. The tests are part of an experiment conducted in collaboration with the Bank for International Settlements and the Swiss financial services provider SIX.
Swiss Central Bank tests CBDC wholesale settlement integration with private banks
A wide range of transactions involving a central bank wholesale digital currency (CBDC) have been processed during the second phase of the Helvetia project, the Swiss National Bank (SNB) revealed in a press release on Thursday.
The trials are being conducted as part of a joint initiative between the SNB, the Bank for International Settlements (BIS) and SIX, Switzerland’s leading provider of financial infrastructure services. Five commercial banks also participated – Citi, Credit Suisse, Goldman Sachs, Hypothekarbank Lenzburg and UBS.
The experiment, which took place in the last quarter of 2021, explored the settlement of interbank, monetary policy and cross-border transactions on the test systems of SIX Digital Exchange (SDX), the Swiss real-time gross settlement system SIX Interbank Clearing (SIC) and basic banking systems, details the SNB.
The Swiss central bank and other banks have integrated a wholesale CBDC into their existing back-office systems and processes. The SNB notes that in the future, an increasing number of financial assets will be tokenized as financial infrastructures run on distributed ledger technology (DLT). Regulators may need to hedge token asset markets in their monetary policies, the authority said and clarified:
International regulatory standards suggest that systemically important infrastructure operators should settle their obligations in central bank money whenever possible and available. Although none of the existing DLT-based platforms are yet systemic, they may become so in the future.
“To continue to fulfill their mandate of ensuring monetary and financial stability, central banks must stay abreast of technological change. The Helvetia project… has allowed the SNB to deepen its understanding of how the security of central bank money could be extended to symbolic asset markets,” added Andréa M. Maechler, Member of the Board of Directors. form the bank.
The Swiss National Bank points out that Helvetia is only an exploratory project, suggesting that it should not be seen as a plan to issue a wholesale CBDC. In December, the SNB, together with the Banque de France and the BIS, conducted another experiment, testing the application of the wholesale CBDC in cross-border payments. The Jura project employed DLT and was also carried out with the support of private sector companies.
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