Swiss National Bank puts CBDC into production

The Swiss National Bank (SNB) and six commercial banks, will collaborate on a pilot focused on tokenized central bank money for financial institutions (referred to as wholesale central bank digital currency or wholesale CBDC).

Swiss National Bank puts CBDC into production

With this pilot, called Helvetia Phase III, the SNB will for the first time issue real wholesale CBDC in Swiss francs on a financial market infrastructure based on distributed ledger technology (DLT).

The SNB is thus moving its work from test environments into production and is making wholesale CBDC available for the settlement of real bond transactions.

The banks involved will carry out the transactions on the DLT platform as intermediaries for issuers and investors.

The tokenised bonds will be settled against wholesale CBDC on a delivery-versus-payment basis.

SIX Digital Exchange (SDX), a fully regulated Distributed Ledger Technology (DLT)-based financial market infrastructure (FMI) for digital assets, will act as trusted gateway and will host the pilot on its digital asset platform.

“With this pilot project, we are now, for the first time, making it possible to securely and efficiently settle transactions with tokenised assets on a regulated and productive DLT platform using real wholesale CBDC,” SNB Chairman Thomas Jordan said in a statement.

The pilot with real Swiss franc wholesale CBDC is scheduled to run from December 2023 to June 2024.

The participating banks are Banque Cantonale Vaudoise, Basler Kantonalbank, Commerzbank, Hypothekarbank Lenzburg, UBS and Zürcher Kantonalbank.

In addition to the SDX platform, the pilot project will use the SIC infrastructure for the tokenisation of central bank money and that of SIX SIS for integration with the traditional bond settlement infrastructure.

Furthermore, SIX Repo and SDX test systems will be used to explore the trading and settlement of repo transactions with wholesale CBDC.

The pilot builds on the findings of earlier Helvetia phases by the BIS Innovation Hub, the Swiss National Bank (SNB) and the financial infrastructure operator SIX (Helvetia Phase I and II).

Project Helvetia Phase III will also extend to the settlement of repo transactions, which are initiated on the CO:RE trading platform of SIX Repo and administered by the Triparty Agent of SIX SIS.

These transactions, which are conducted in test environments, will be collateralized by digital bonds eligible for SNB repo transactions and settled on SDX in wCBDC.

“This collaboration between SIX, the Swiss National Bank, and six commercial banks on the pilot operation for tokenized central bank money is a pioneering leap,” comments Jos Dijsselhof, CEO SIX.

“It’s a testament to our commitment to the future of digital finance and underscores the transformative power of DLT in the financial system.”