Switzerland Central Bank Willing to Expand CBDC Project

The Swiss National Bank is reportedly amenable to expanding its digital currency project.

“We would like to see a pilot which develops, with more banks joining and a higher volume of transactions,” said governing board member Antione Martin, whose comments at the the Point Zero Forum in Zurich on Wednesday (July 3) were reported by Reuters.

The central bank is already conducting a pilot that has used a wholesale central bank digital currency (CBDC) and successfully settled four tokenized bond issuances and one secondary market transaction, PYMNTS reported in May.

Project Helvetia III, which debuted in December, is testing tokenized central bank money for wholesale use and allows participating banks to use Swiss franc wholesale CBDC to settle transactions with tokenized bonds on a regulated trading and settlement platform for tokenized assets, SIX Digital Exchange (SDX), Thomas J. Jordan, chairman of the bank’s governing board, said in remarks at the BIS Innovation Summit in Basel, Switzerland.

“Settlement in central bank money is crucial for two reasons,” Jordan said. “First, it eliminates credit risk and minimizes liquidity risk in settlement, thereby contributing to financial stability. And second, it reinforces the role of central bank money as the anchor for the monetary system.”

One month earlier, Jordan had argued that the risk of a retail CBDC — that is, one offered to the general public — would outweigh any potential benefits. He argued that both consumers and businesses have access to a range of payment instruments offered by the private sector, making a retail CBDC unnecessary.

A wholesale CBDC, on the other hand, could facilitate the safe and efficient settlement of tokenized assets, Jordan said during a talk in Zurich.

The Swiss National Bank is one of dozens of central banks around the world working on some form of a CBDC.

Meanwhile, the concept remains a source of controversy in the U.S., with the Republican-led House of Representatives passing a bill in May requiring Congressional approval before the government could issue a CBDC.

“This bill requires authorizing legislation from Congress for the issuance of any CBDC — ensuring that it must reflect American values,” said Rep. Patrick McHenry, the North Carolina Republican who heads the House Financial Services Committee. “If not open, permissionless and private, a CBDC is no more than a [Chinese Communist Party (CCP)]-style surveillance tool waiting to be weaponized.”

President Joe Biden announced an executive order on the research and development of a CBDC in March 2022, saying key focus points included protecting the international standing and influence of the U.S. dollar as the global reserve currency, as well as protecting privacy while providing interoperability with other CBDCs.