Swiss National Bank Advances with Wholesale CBDC in Collaboration With Leading Banks

The Swiss National Bank (SNB) has intensified its efforts in developing a wholesale central bank digital currency (wCBDC).

A press release details that the SNB is partnering with six prominent commercial banks and the SIX Digital Exchange (SDX) to accelerate the deployment of a CBDC in Switzerland.

Named the Swiss Franc wCBDC, this initiative is a key part of the Swiss government’s strategy to establish a tokenized form of central bank money accessible to financial institutions within the country.

The consortium of commercial banks involved comprises Banque Cantonale Vaudoise, Basler Kantonalbank, Commerzbank, Hypothekarbank Lenzburg, UBS, and Zürcher Kantonalbank. These banks will be leveraging the infrastructure provided by SDX and the Swiss Interbank Clearing (SIC) system.

This wCBDC is integrated into what is known as Helvetia Phase III, the third phase of Switzerland’s pilot program for digital currency.

Expanding on the objectives of this phase, the SNB mentioned that “it aims to test, in a live environment, the settlement of primary and secondary market transactions using the wholesale CBDC.”

Additionally, the participating institutions will have the capacity to issue digital bonds denominated in Swiss Francs, facilitating the settlement of digital trades through a delivery-versus-payment model.

Helvetia Phase III will also be utilized in the settlement of repurchase agreement (repo) transactions on the SDX’s SIX Repo CO:RE trading platform.

The bank outlined that this next phase of the CBDC pilot is scheduled to operate from December 2023 until June 2024.

Europe Initiates Preparatory Work for a Digital Euro

Switzerland is among numerous countries exploring the implementation of tokenized fiat currencies on distributed ledger technology (DLT).

The European Union is also advancing with its digital currency ambitions, having announced the commencement of a preparatory phase for the digital Euro.

European Central Bank (ECB) President Christine Lagarde confirmed via a post on X (formerly known as Twitter) that the digital Euro project is a forward-looking initiative.

According to Lagarde, the digital Euro would coexist with cash as a method of payment within the EU.

The preparatory groundwork is set to begin by November 2023, aiming to follow the proposed timeline closely.

While the advent of a digital Euro appears likely, Lagarde highlighted that the ECB’s Governing Council must still decide on the issuance of this CBDC.

In contrast to the European stance, the U.S. appears less committed to developing a digital version of the dollar.

Michael Barr, the Fed’s Vice Chair for Supervision, clarified in recent statements that issuing a CBDC is not an immediate priority for the U.S. and that any such decision would rest with Congress.

However, Barr did not entirely dismiss the concept, indicating that the Federal Reserve continues to explore the technology through ongoing discussions with experts in the blockchain field.