The Swiss National Bank (SNB) is set to launch a wholesale central bank digital currency (CBDC) pilot supported by the country’s SIX digital exchange.
While attending the Point Zero Forum in Zurich last week, SNB chairman Thomas Jordan confirmed that the pilot is “not just an experiment”, but rather a “real money equivalent to bank reserves”.
“The objective is to test real transactions with market participants,” he added.
The pilot will run on the SIX digital exchange, the country’s principal stock exchange, for a limited time and is set to commence “soon”.
Like many other central banks, the SNB continues to explore the integration of wholesale CBDCs. Back in Q4 2021, it joined the Bank for International Settlements (BIS), SIX and five commercial banks, including Citi, Credit Suisse, Goldman Sachs, Hypothekarbank Lenzburg and UBS, in testing the interoperability of interbank, monetary policy and cross-border transaction settlements with wholesale CBDCs.
This activity formed the main basis for phase two of Project Helvetia, a ‘multi-phase investigation’ that involved testing the settlement of tokenised assets in central bank money.
CBDCs through the lens of wholesale look specifically at facilitating payments between banks, as opposed to the retail alternative.
In this way, the SNB’s interest in wholesale CBDCs is clear, remaining strong due to the use of tokenised securities within their processes.
However, the central bank remains on the fence about dabbling in retail, or public forms of CBDCs, as confirmed by Jordan’s comments at the conference last week.
He cited the potential risk they pose to the existing financial system and the difficulty in controlling them as the two main reasons behind the bank’s inactivity in this area.
Despite this, Jordan confirmed that the bank will “not exclude that we will never introduce retail [CBDCs] but nevertheless, we are a little bit prudent at the moment”.