Switzerlands Central Bank Postpones CBDC Pilot for Two Years

Swiss Central Bank Pushes Back CBDC Pilot by Two Years


Jimmy Aki
Updated:
June 20, 2024 14:58 EDT
|
2 min read


The Swiss National Bank (SNB) has announced an extension of its wholesale central bank digital currency (CBDC) pilot program, known as the “digital franc,” on June 20.
The expansion
will gradually include more financial institutions while assessing the performance and security of the digital franc in real-world scenarios.
Extension of Swiss CBDC Pilot
SNB governing board member Antoine Martin revealed that Switzerland has delayed the initial pilot date from June 30 by approximately two years, now scheduled for at least 2026.
The Swiss CBDC pilot is
specifically focused
on wholesale applications designed for use between financial institutions, rather than retail consumers. This differs from retail CBDC pilots in countries like China, where the digital yuan is intended for public use.
Martin emphasized that the wholesale CBDC “can be made available for a wider range of financial transactions.” The current pilot involves six commercial banks, including UBS Group AG and Commerzbank AG, working in partnership with Swiss stock exchange provider SIX.
Martin argued that the project’s future success relies on two key factors: attracting new financial market participants and increasing transaction volume. He also highlighted the importance of settling more financial market transactions on the platform.
Martin cautioned that this extension does not guarantee the permanent introduction of wholesale CBDC or digital SNB Bills.
As of now, the digital franc has shown practical utility during testing. For instance, the SNB has issued blockchain-based digital currency for institutional use only, allowing financial institutions to transact with the central bank using the tokenized asset.
Moreover, the digital franc has been used to settle at least five bond issuances on SIX’s digital exchange in Zurich, with a significant milestone achieved in a $226 million settlement for a World Bank bond earlier this month.
The Role of BIS Innovation Hub in CBDC Development
The Bank for International Settlements (BIS) plays a crucial role in advancing Central Bank Digital Currency (CBDC) initiatives globally.
Through its Innovation Hub, the BIS facilitates collaboration among central banks worldwide and drives research and development in digital currencies and financial technology innovation.
In 2021, the Swiss National Bank, the Banque de France, and the BIS Innovation Hub launched
Project Jura
, focusing on wholesale CBDCs (wCBDCs) for cross-border settlements.
Project Dunbar also brings together multiple central banks to develop prototypes for a shared platform that enables international settlements using multi-CBDCs.
Recall that in January 2024, the BIS announced that its
CBDC project is entering a new phase
. The Aurum Project explores the privacy of payments in retail CBDCs. This is one of the six projects for 2024 being developed in the Innovation Hub work program.
The BIS is also working on Project mBridge, a multi-CBDC common platform for wholesale cross-border payments. This initiative came after the Central Banks of China and the United Arab Emirates (UAE) signed an MoU to enhance digital currency cooperation.
Another notable project is Mariana, a collaboration involving the central banks of France, Singapore, and Switzerland. The Mariana initiative explores the application of automated market makers (AMMs) for wholesale CBDC transactions across borders, utilizing decentralized finance (DeFi) technologies to revolutionize cross-border payments.
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