A top official of the Bank of International Settlement (BIS) disclosed that the institution would be collaborating with the Swiss National Bank (SNB) to trial a Central Bank Digital Currency (CBDC) later this year.

Benoît Cœuré, head of the BIS Innovation Center, made this known at the Bund Summit held in Shanghai yesterday as published by local media outlet The Paper.

According to Cœuré, the proof-of-concept CBDC scheduled to launch by the end of this year will help identify the elements needed for a retail CBDC.

These elements include connections to existing payment systems, digital identity tracks, compliance monitoring, among others.

Cœuré revealed at the event that in the future, the BIS would work with other central banks, including the Hong Kong Monetary Authority and the Bank of Thailand, to experiment with cross-border use of digital currencies.

Last year, Swiss intensified efforts to issue a CBDC, which saw its apex bank partner with its Swiss stock exchange operator SIX Group.

At the time, the project was launched to explore how CBDC could be used to settle tokenized assets between market participants.

As the use of banknotes in payment declined globally due to recent events, including the coronavirus (COVID-19) pandemic, countries are considering ways to enhance their payment systems from the obsolete traditional means to digital methods.

This need has prompted nations to embark on a series of research projects to study the possibility of issuing CBDC and its impact on their economies to remain relevant when the need arises.

Earlier this month, the BIS, in collaboration with seven central banks, including the SNB, published a report outlining how banks should design CBDCs in order to align with existing policies.

As per the report, CBDCs should coexist with existing payment methods, support broader policy goals, and promote end-users’ innovation and efficiency.