The Swiss National Bank (SNB) has successfully tested wholesale CBCD [central bank digital currency] settlement in a partnership with the Bank for International Settlements (BIS) and SIX (parent of the Swiss Stock Exchange). The test was completed during Q4 2021. The project utilized SDX, the world’s first regulated DLT-based financial market infrastructure provided by SIX.
Project Helvetia aims to review the future of digital assets or tokenized financial assets leveraging blockchain or distributed ledger technology (DLT).
According to a note from SNB, the bank along with five commercial banks integrated wholesale CBDC in their existing back-office systems and processes. Tests covered a range of transactions in Swiss francs including; interbank, monetary policy, and cross-border.
Phase II of Project Helvetia is said to successfully demonstrate that such integration is operationally possible and issuing a wholesale CBDC on a DLT platform operated by a private company is feasible under Swiss law.
The second phase will include a joint experiment by BIS, SNB, and SIX, which also include five commercial banks: Citi, Credit Suisse, Goldman Sachs, Hypothekarbank Lenzburg, and UBS.
SNB states that international regulatory standards suggest that operators of systemically important infrastructures should settle obligations in central bank money whenever practical and available. Additionally, central banks may need to extend monetary policy implementation to tokenized asset markets.
“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,” said Benoît Cœuré, Head of the BIS Innovation Hub. “As DLT goes mainstream, this will become more relevant than ever.”
Andréa M. Maechler, Member of the Governing Board of Swiss National Bank, said that central banks must 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.”
“The project demonstrates that the SDX platform supports wholesale CBDC for settling tokenised assets end to end,” said Jos Dijsselhof, CEO, SIX.
Phase II continues the exploration of tokenized asset settlement in wholesale CBDC that was started by Project Helvetia Phase I in 2020.