Global: Swiss National Bank Touts Wholesale CBDC as Breakthrough for Financial Markets

The Swiss National Bank (SNB) is making significant strides in the realm of central bank digital currency (CBDC), with its pilot project, Project Helvetia III, marking a notable advancement in wholesale CBDC usage. The project, initiated in December, has successfully settled four tokenized bond issuances and one secondary market transaction.

Thomas J. Jordan, Chairman of the governing board of the Swiss National Bank, unveiled these developments during the BIS Innovation Summit in Basel. He emphasized the pivotal role of settlement in central bank money, highlighting its contribution to financial stability by eliminating credit and liquidity risks in settlement processes.

Through Project Helvetia III, the SNB is leveraging tokenized central bank money to settle transactions with tokenized bonds on the SIX Digital Exchange (SDX), a regulated trading and settlement platform for tokenized assets. This integration of assets and central bank money on a third-party platform streamlines financial market infrastructures, reduces synchronization efforts, and enhances programmability.

Jordan underscored the importance of settlement in central bank money as a fundamental pillar of the monetary system, particularly in the context of mainstream adoption of asset tokenization. He outlined two additional approaches being tested by the SNB: linking the tokenized asset platform with the Swiss RTGS system and issuing private token money backed by sight deposits at the SNB, offering bankruptcy protection.

The SNB’s exploration of wholesale CBDC usage represents a significant milestone in the evolution of digital currency and financial market infrastructure. Previous pilot projects conducted by the SNB have laid the groundwork for integrating digital assets with central bank currencies and streamlining back-office processes for commercial banks, paving the way for further tokenization of financial assets.

As the SNB continues to innovate in the CBDC space, the integration of tokenized central bank money with existing financial market infrastructure holds promise for enhancing efficiency, reducing risk, and reinforcing the role of central bank money as a cornerstone of the monetary system.