December 1, 2023 – In a groundbreaking move, the Swiss National Bank (SNB), in conjunction with five Swiss banks and one German commercial bank, has launched a pilot project for central bank digital currency (CBDC) designed for financial institutions. This initiative, known as Helvetia Phase III, takes a significant step forward by introducing real wholesale CBDC in Swiss francs on the regulated platform of SIX Digital Exchange (SDX), utilizing distributed ledger technology (DLT).
For the first time, the SNB is transitioning from test environments to production, making wholesale CBDC available for the settlement of actual bond transactions. The participating banks, including Banque Cantonale Vaudoise, Basler Kantonalbank, Commerzbank, Hypothekarbank Lenzburg, UBS, and Zürcher Kantonalbank, will act as intermediaries for issuers and investors, conducting transactions on the DLT platform. Tokenized bonds will be settled against wholesale CBDC on a delivery-versus-payment basis.
The pilot project, involving the issuance of real Swiss franc wholesale CBDC, is scheduled to run from December 2023 to June 2024. The SDX platform, SIC infrastructure, and SIX SIS will be utilized for the tokenization of central bank money and integration with traditional bond settlement infrastructure. Additionally, SIX Repo and SDX test systems will explore the trading and settlement of repo transactions with wholesale CBDC.
The introduction of distributed ledger technology and tokenized assets in regulated financial systems promises efficiency gains and increased transparency. Central to the initiative is the exploration of how token transactions between financial institutions can be settled in central bank money, devoid of counterparty risk, ensuring stability and efficiency in the financial system.
The SNB’s decision to examine various models for settling tokenized asset transactions was announced in March 2023. The pilot project adopts the first model, issuing wholesale CBDC for settling tokenized assets, building upon insights gained from earlier Project Helvetia phases.
It’s crucial to note that the pilot project does not commit the SNB to the permanent introduction of wholesale CBDC. Instead, it serves as a testing ground for different models of settling tokenized assets, reaffirming the SNB’s commitment to innovation and its leading role in the international exploration of CBDC applications.
Thomas J. Jordan, Chairman of the Swiss National Bank’s Governing Board, expressed pride in the SNB’s pioneering role in this innovative project, emphasizing the collaboration with SIX and participating banks in advancing research in the CBDC field.
