Swiss National Bank announces CBDC pilot

The Swiss National Bank (SNB) is gearing up to launch a wholesale central bank digital currency (CBDC) pilot, which will be supported by Switzerland’s principal stock exchange, SIX Digital Exchange.

SNB chairman, Thomas Jordan, emphasised that the pilot is not just an experimental project but a “real money equivalent to bank reserves.” The primary objective of the pilot is to test real transactions involving market participants. The pilot program will operate on the SIX digital exchange and is expected to commence in the near future.

Like several other central banks, the SNB has been actively exploring the integration of wholesale CBDCs. In the fourth quarter of 2021, the SNB, along with the Bank for International Settlements (BIS), SIX, and five commercial banks including Citi, Credit Suisse, Goldman Sachs, Hypothekarbank Lenzburg, and UBS, conducted tests to assess the interoperability of interbank, monetary policy, and cross-border transaction settlements using wholesale CBDCs.

These tests laid the foundation for the second phase of Project Helvetia, an ongoing “multi-phase investigation” focused on testing the settlement of tokenised assets using central bank money.

Wholesale CBDCs primarily aim to facilitate payments between banks, distinguishing them from their retail counterparts, which target the general public. SNB’s interest in wholesale CBDCs stems from their potential to enhance processes involving tokenised securities.

However, the central bank remains cautious about venturing into retail or public CBDCs. Chairman Thomas Jordan cited concerns over the potential risks posed to the existing financial system and the challenges in controlling retail CBDCs as the main reasons behind the bank’s hesitancy in this area.

While the SNB is currently cautious about retail CBDCs, Jordan did not rule out the possibility of introducing them in the future, stating, “We will not exclude that we will never introduce retail [CBDCs], but nevertheless, we are a little bit prudent at the moment.” The SNB continues to closely monitor the developments and potential implications of retail CBDCs before making any definitive decisions.