Switzerlands Central Bank Postpones CBDC Pilot for an Additional Two Years

Swiss Central Bank Postpones CBDC Pilot by Two Years


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


The Swiss National Bank (SNB) has announced a delay in its wholesale central bank digital currency (CBDC) pilot program, commonly referred to as the “digital franc.”
The expansion of the program will involve a gradual inclusion of more financial institutions, as well as an assessment of the digital franc’s performance and security in real-world scenarios.
Extension of Swiss CBDC Pilot
Antoine Martin, a member of the SNB governing board, has revealed that Switzerland has postponed the initial pilot date from June 30 to at least 2026, a delay of approximately two years.
The Swiss CBDC pilot is specifically focused on wholesale applications designed for use among financial institutions, rather than retail consumers. This approach differs from retail CBDC pilots in countries like China, where the digital yuan is intended for use by the general public.
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 depends 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.
However, Martin cautioned that this extension does not guarantee the permanent introduction of wholesale CBDC or digital SNB Bills.
As it stands, the digital franc has shown practical utility during testing. The SNB has issued a blockchain-based digital currency for institutional use only, enabling financial institutions to use the tokenized asset for transactions with the central bank.
Furthermore, the digital franc has been used to settle at least five bond issuances on SIX’s digital exchange in Zurich, with a significant milestone reached 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) is a key player 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.
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 and 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 about 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, leveraging decentralized finance (DeFi) technologies to transform cross-border payments.
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