Swiss central bank completes wholesale CBDC trial

The SNB conducted the trial with the BIS, SIX and five commercial banks

Exterior view of the Swiss National Bank                                 
SNB tested the integration of a CBDC with commercial banks – Photo: Alamy
                                

The central bank of Switzerland, the Swiss National Bank (SNB), has completed its second phase of Project Helvetia by successfully testing the integration of a wholesale central bank digital currency (CBDC) with commercial banks.

The SNB performed the trial in conjunction with the Bank for International Settlements (BIS) and SIX, Switzerland’s main provider of financial infrastructure services. The test also included five commercial banks: Citi, Credit Suisse, Goldman Sachs, Hypothekarbank Lenzburg and UBS.

Project Helvetia “looks toward a future with more tokenised financial assets based on distributed ledger technology co-existing with today’s systems”.

The SNB and the five commercial banks integrated the wholesale CBDC in their existing back-office systems and processes.

The Swiss central bank admitted that the integration of wholesale CBDC into existing banking systems was “complex” but a key requirement for issuance.

Thanks to the second phase of Project Helvetia, the SNB now knows that “issuing a wholesale CBDC on a distributed ledger technology (DLT) platform operated and owned by a private sector company is feasible under Swiss law”.

The trial was performed in Q4 2021

The testing of the wholesale CBDC was carried out in the fourth quarter of 2021 and it explored the settlement of interbank, monetary policy and cross-border transactions on the test system of SIX Digital Exchange (SDX), SIX Interbank Clearing (SIC) and core banking systems.

However, this experiment was of an “exploratory nature” and should not be interpreted as an indication that the Swiss central bank plans to issue a wholesale CBDC.   

Still, the SNB is aware that it may need to extend monetary policy implementation to tokenised asset markets.

Using innovation to preserve the financial system

Andréa M. Maechler, member of SNB’s Governing Board, said: “To continue fulfilling their mandates of ensuring monetary and financial stability, central banks need to stay on top of technological change. Project Helvetia is a prime example of how to achieve this. It allowed the SNB to deepen its understanding of how the safety of central bank money could be extended to tokenised asset markets.”

Benoît Cœuré, head of the BIS Innovation Hub, said: “We have demonstrated that innovation can be harnessed to preserve the best elements of the current financial system, including settlement in central bank money, while also potentially unlocking new benefits. As DLT goes mainstream, this will become more relevant than ever.”

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