- The digital currency will be issued on Switzerland’s SIX digital exchange
- The CBDC pilot would not be a mere experiment but a tangible form of money equivalent to bank reserves.
Swiss National Bank (SNB) has announced its plans to launch a wholesale digital currency (CBDC), marking a significant step towards embracing the benefits of blockchain technology. SNB Chairman Thomas Jordan revealed the project during his speech at the Point Zero Forum on Monday.
The digital currency will be issued on Switzerland’s SIX digital exchange, and Jordan emphasized that it would not be a mere experiment but a tangible form of money equivalent to bank reserves. “This is not just an experiment; it will be real money equivalent to bank reserves, and the objective is to test real transactions with market participants.”
The wholesale central bank digital currency (CBDC) aims to test real transactions with market participants, showcasing the potential of blockchain technology in facilitating efficient and secure financial transactions.
This move builds upon the progress made by SNB in Project Helvetia, a collaborative initiative with five partner banks to integrate a wholesale CBDC into their existing back-office systems and processes. The successful completion of the second phase of the project demonstrated the viability and potential benefits of a CBDC within Switzerland’s financial infrastructure.
Interestingly, SNB’s stance towards CBDCs has evolved over time. In 2021, Carlos Lenz, the chief economist at SNB, expressed reservations about blockchain-based decentralization features, stating that they may need to be more efficient for state-controlled digital currencies like the digital franc. However, the recent decision to launch a wholesale digital currency suggests a change in approach, highlighting the growing recognition of the transformative power of blockchain technology within the Swiss financial landscape.
SNB’s initiative comes amid the International Monetary Fund’s (IMF) efforts to establish a global infrastructure for CBDCs. The IMF’s goal is to ensure interoperability among various national digital currencies and prevent their underutilization.
IMF Managing Director Kristalina Georgieva noted that several central banks worldwide are nearing the completion of their own national digital currencies, with at least ten already on the cusp of issuing them. However, the development and regulation of CBDCs still require extensive deliberation and decision-making.
This announcement from SNB also aligns with the broader global trend of central banks exploring the potential of CBDCs. Over 100 countries’ central banks are actively considering what their CBDCs might entail, with all G7 economies having transitioned from the research stage to development or concrete pilot projects.