Swiss National Bank Extends Wholesale CBDC Pilot Program
The Swiss National Bank (SNB) has announced an extension of its wholesale central bank digital currency (CBDC) pilot program, also known as the “digital franc.” This extension will gradually incorporate more financial institutions while evaluating the digital franc’s performance and security in real-world scenarios.
Extension of the Pilot Program
- SNB postponed the initial pilot date for June 30 by approximately two years until at least 2026.
- The pilot is specifically focused on wholesale applications for use between financial institutions.
- It currently involves six commercial banks, including UBS Group AG and Commerzbank AG.
Key Factors for Success
- Attracting new financial market participants and boosting transaction volume is crucial.
- The importance of settling more financial market transactions on the platform was highlighted.
- The extension does not guarantee the permanent introduction of wholesale CBDC or digital SNB Bills.
Practical Utility of Digital Franc
- The digital franc has been used to settle at least five bond issuances on SIX’s digital exchange in Zurich.
- A major milestone was reached in a $226 million settlement for a World Bank bond.
Role of BIS Innovation Hub in CBDC Development
The Bank for International Settlements (BIS) plays a key role in the global advancement of Central Bank Digital Currency (CBDC) initiatives through its Innovation Hub. Collaboration among central banks worldwide is encouraged, driving research and development in digital currencies and financial technology innovation.
Project Jura and Project Dunbar
- Project Jura, launched in 2021, focuses on wholesale CBDCs for cross-border settlements.
- Project Dunbar brings central banks together to develop prototypes for a shared platform enabling international settlements using multi-CBDCs.
The Aurum Project and mBridge
- The Aurum Project explores the privacy of payments in retail CBDCs.
- Project mBridge is a multi-CBDC common platform for wholesale cross-border payments.
Project Mariana
- Mariana involves the central banks of France, Singapore, and Switzerland.
- It explores the application of automated market makers (AMMs) for wholesale CBDC transactions across borders, leveraging DeFi technologies.
Hot Take: The Future of CBDCs
Central Bank Digital Currencies (CBDCs) are shaping the future of finance, with ongoing pilot programs and collaborations driving innovation in digital currencies and cross-border settlements. The extension of the Swiss National Bank’s wholesale CBDC pilot and the projects led by the BIS Innovation Hub signify the continued development and evolution of CBDCs in the global financial landscape.
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