Swiss National Bank: Attempting Central Bank Digital Currency and Blockchain Technology

Swiss National Bank Extends Trial of Central Bank Digital Currency

In June, the Swiss National Bank (SNB) announced the extension of the trial of wholesale central bank digital currency (wCBDC) for another two years. This operation is part of the Helvetia III Project Initiative, aimed at exploring potential applications of blockchain technology in the financial sector.

Testing Monetary Policy Operations Based on DLT Technology

During the trial, the central bank carried out monetary policy operations based on Distributed Ledger Technology (DLT). As part of this experiment, the SNB issued 64 million Swiss francs in the form of digital securities, which were listed on the SIX Digital Exchange.

Efficiency and Feasibility of wCBDC

The security was presented within just seven days of its issuance, which is a positive signal for the SNB. The central bank shared insights from the trial, indicating the feasibility and efficiency of this approach.

However, most results suggest that SNB’s digital securities represent a new process that requires additional work. The SNB acknowledges that DLT technology is still niche, with relatively low transaction volumes.

Challenges and Perspectives

The central bank emphasizes that the question of conducting monetary policy operations on DLT-based infrastructure is premature. However, issuing and settling the security token via wCBDC on the SDX exchange proved to be efficient for monetary policy purposes.

The SNB acted as the issuer, issuer’s agent, and payment agent for the securities, improving transparency and reducing coordination efforts. Using wCBDC required an additional step compared to traditional cash management.

Project Agora

The Swiss National Bank and the SDX exchange are participating in Project Agora, which aims to explore the possibilities of tokenized cross-border payments. This initiative is part of broader trials organized by the Bank for International Settlements (BIS) involving seven central banks and over 40 private institutions.