November 9, 2021

Bank of Switzerland announces CBDC readiness

The Swiss National Bank (SNB) has completed testing a wholesale CBDC (wCBDC). Board member Thomas Moser said in an interview with CoinDesk that a technical launch could take place in January 2022, subject to a political decision.

If approved, the regulator will engage the SIX Digital Exchange (SDX).

Technically we will be ready. We have taken all the details into account. We have done end-to-end connectivity and sorted out how it will be reflected on the balance sheet, how to conduct transactions. The only question is whether we can legally work with wCBDC, the official said.

The Helvetia experiment, supported by the Bank for International Settlements, started in 2019.

In December 2020, its participants reported the success of the CBDC trial for the settlement of tokenised assets. The legal and technical feasibility of their transfer was explored.

The second phase of the Helvetia project has now been completed. It involved integration of wCBDC into the infrastructures of five banks. The publication recalled that Citibank, JPMorgan and Credit Suisse were previously mentioned among the participants.

The missing link in the scheme was the required FINMA licences for SDX. The platform received them in September. The first real transactions will take place in November. A report on the results of the second phase will be published in January.

The combination of digital cash and a distributed ledger (SDX leverages R3's Corda) allows for atomic swaps.

Everyone complains about the slow T+1 and T+2, but they give banks time. Atomic swaps will make liquidity management more difficult, forcing financial institutions to look for an answer to cost-benefit questions, Moses commented.

The official noted that the regulator favours CBDC over stablecoins.

In 'stablecoins' you always have counterparty risk on the issuer. If SDX becomes systemically important, we will be faced with the need for wCBDC instead of a private version of money," he explained.

SNB chief economist Carlos Lenz questioned the need for a digital franc in June.

The Swiss government had previously found no benefits from issuing a retail CBDC, but acknowledged some benefit from its wholesale version. This position was echoed by the SNB.

Jack Evans

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I became a crypto asset owner in 2014, when the industry was in its infancy. Before that, I was working in the classic US and European stock markets. Since then, I have gained extensive experience in both cryptocurrency investing and day trading. I am happy to share with readers my experience with crypto exchanges, DeFi and NFT instruments. 

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