Basel Achieves Milestone with Tokenized Bond Settlement
The city of Basel in Switzerland has achieved a significant milestone by completing the first regulated settlement of tokenized bonds in a production environment. This accomplishment was made possible through the Helvetia III wholesale central bank digital currency (WCBDC) pilot program. The city issued a tokenized bond via the Basel Cantonal Bank, which was settled using a WCBDC.
Efficient and Cost-effective Transactions
By using on-chain money, these transactions are more cost-effective and efficient. Participants no longer have to wait for private bank redemptions in the settlement process, making the overall process faster. This streamlining of transactions prioritizes efficiency and eliminates the need for reconciling transactions with a private bank account.
Praise for the Development
David Newns, head of SIX digital exchange, hailed this development as a significant step in modernizing securities markets. He emphasized that the settlement of securities transactions in WCBDC is a major milestone for the industry’s adoption of a tokenized, DLT-based financial markets infrastructure.
The Next Steps for the WCBDC Pilot Program
The Helvetia III pilot program involves six commercial banks and the SIX digital exchange. The next step for this wholesale CBDC is to be used for repo transactions, as previously indicated by the SIX digital exchange. These operations are conducted on R3’s Corda blockchain platform, with its CEO David Rutter viewing them as another important milestone in the development of wholesale CBDC and digital assets.
Hot Take: Basel Paves the Way for Tokenized Bond Settlement Using Wholesale CBDC
In a groundbreaking achievement, the city of Basel successfully settled tokenized bond transactions using a wholesale central bank digital currency. By leveraging on-chain funds, Basel eliminated the need to reconcile transactions with private bank accounts, resulting in faster and more cost-effective processes. This milestone not only modernizes the securities markets but also signifies a significant step in the adoption of a tokenized, DLT-based financial infrastructure. With the next phase of the pilot program focusing on repo transactions, Basel is leading the way in the development of wholesale CBDC and digital assets.
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