It remains a policy decision whether the Swiss National Bank would go ahead with the launch.
Project Helvetia began in 2019 with the Swiss National Bank in collaboration with Swiss exchange Six Digital Exchange (SDX) and Bank for International Settlements (BIS) working on developing a wholesale Central Bank Digital Coin (CBDC). Recently, in an interview given to Coindesk, Thomas Moser, himself a policymaker and member of the bank’s governing board confirmed the successful testing of the Swiss wCBDC.
The Central bank has been quite vocal about its dislike for retail CBDC however the wholesale version would be less of an issue with respect to getting the necessary approvals. The wCBDC will allow the settlement of wholesale payments. Moser confirmed that right now the launch is still on hold as there are no plans for the same.
Swiss National Bank and Its wCBDC Project
With the successful testing, the second phase of the project comes to an end which involved the integration of SNB and SDX with five banks. Although SNB has not divulged details about these participating banks, there are rumours as to the members being JPMorgan, Citibank and Credit Suisse. There were some delays with respect to getting the required licenses from market regulator FINMA. But finally the SDX’s parent firm SIX received them and now 5 live transactions have been planned for November.
Moser being extremely positive about the testing confirmed that they are ready with all the details concerning the infrastructure. This marks a significant distinction when compared with other similar research projects involving central banks.
The concept of Atomic settlement is at the core of wCBDC. It combines digital cash with SDX and uses R3’s Corda network in its development. Under an atomic settlement system, the trading of a digital asset depends on the cash transfer at the same time. Moser spoke about the challenges that the atomic settlements bring along like problems with liquidity management. Another topic of discussion was stablecoins which Moser seems to prefer as the mode of payment on blockchains. However, he expressed his concerns about the risks associated with the issuer and why the central banks want to settle transactions in the legal tender for security issues.
It seems there would not be any major push towards launching the wCBDC but the successful testing and the groundwork created points towards a crypto-friendly future. A lot of feasibility issues and trade-offs need to be studied and figured out but with Central Banks opening to the idea of central bank-backed digital coins, it seems crypto is going to enter the legal market in coming years. More and more trade enthusiasts and analysts are already predicting crypto’s changing days.
The Swiss National Bank is Switzerland’s central bank which controls the country’s monetary policy. Price stability and economic development are the bank’s primary goals. The introduction of such a massive structural change within the country’s economic ecosystem would definitely face a lot of policy debates and challenges. Whether the SNB goes ahead and launches the wCBDC would be interesting to see as it would catapult a lot of changes across neighbouring countries as well as interdependent financial systems.