Swiss National Bank Launches CBDC Pilot Program with Commercial Banks
The Swiss National Bank (SNB) has announced a pilot program for a central bank digital currency (CBDC) in collaboration with six commercial banks. The pilot, called Helvetia Phase III, will run from December 2023 to June 2024 on the SIX Digital Exchange (SDX). Participating banks include Banque Cantonale Vaudoise, Basler Kantonalbank, Commerzbank, Hypothekarbank Lenzburg, UBS, and Zürcher Kantonalbank.
“With this pilot project, we are now, for the first time, making it possible to securely and efficiently settle transactions with tokenized assets on a regulated and productive DLT platform using real wholesale CBDC.”
– Thomas J. Jordan, Chairman of the SNB’s Governing Board
The pilot aims to explore the settlement of real bond transactions using a digital representation of the Swiss franc. The Swiss Interbank Clearing infrastructure will be used to tokenize central bank money, while SIX Repo and SDX test systems will investigate the trading and settlement of repo transactions with wholesale CBDC.
No Commitment to Permanent Introduction
It is important to note that this pilot does not indicate a commitment by the SNB to permanently introduce a digital state-controlled currency. The SNB has previously expressed concerns about CBDC and has yet to identify compelling use cases. Andréa M Maechler, a former member of the SNB’s Governing Board, stated that issuing and redeeming CBDC could add unnecessary risk and volatility to the system.
Hot Take: Testing the Waters for CBDC Implementation
The Swiss National Bank’s pilot program for a central bank digital currency (CBDC) in collaboration with commercial banks demonstrates a cautious approach to exploring the potential of CBDC. By partnering with six commercial banks, the SNB aims to test the settlement of real bond transactions using a digital representation of the Swiss franc. However, the SNB emphasizes that this pilot does not commit to a permanent introduction of a digital state-controlled currency, highlighting their ongoing evaluation of CBDC use cases. The cautious stance reflects concerns about potential risks and volatility associated with CBDC implementation. This pilot program serves as a crucial step in understanding the feasibility and benefits of CBDC adoption in Switzerland’s financial landscape.
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