There has been a lot of talk about central bank digital currencies (CBDCs) and the affinity of governments towards them. While Japan and China appear to be at the forefront of this innovation in digital currency, it seems that Switzerland is also making a great deal of progress. The Innovation Hub of the Swiss Center’s Bank of International Settlements (BISH) announced that two proof-of-concepts had been completed for a potential wholesale CBDC. The new CBDC initiative is titled ‘Project Helvetia’ and it is a collaboration between the Swiss National Bank (SNB) the BISH and the top exchange of the country, the Six Group.
This Six Group had also made a separate announcement where it highlighted that they would explore the technological and legal feasibility of transferring digital assets through a wholesale CBDC. From there, they will move the assets to the proprietary distributed digital asset platform of the exchange called the Six Digital Exchange. This platform will also come with services, such as custody, trading, issuance, settlement, and management. Even though the development indicates that the top financial minds in Switzerland believe that blockchain needs to be a part of the nation’s financial future, it doesn’t necessarily mean that it will be utilized in the launch of a wholesale CBDC.
It was also highlighted by the partners that the experiment doesn’t mean that they have an interest in developing a CBDC. A board member of the SNB, Andrea Maechler, said that the project was simply an acknowledgment by the agency of innovative technologies. Hence, he said that they just didn’t want to miss out on the opportunity of incorporating these technologies within the financial system. He said that no matter what technologies may be adopted by the financial market, the reliability and safety of the Swiss financial infrastructure should be preserved.
He said that the SNB would be ready if distributed ledger technology can provide significant improvements in the trading and settlement of securities. The BIS has also appeared to be quite reluctant in dismissing cash entirely in favor of CBDCs. Head of the Innovation Hub, Benoît Cœuré, argued last month that despite the increasing frenzy of CBDC, fiat money would still maintain its position. In his interview, Cœuré highlighted that even though cash wasn’t being used that much as a means of payment, it remains a significant form of currency. He said that rather than pushing CBDCs into becoming the status quo, governments should be more dedicated to providing variety to the people.
Even though countries within the euro zone are divided in their opinion, China and Japan have chosen to move forward with their projects quickly. China has already begun to conduct tests for the digital yuan and has consolidated several regions and partners to be a part of these tests in order to see how they will operate. As far as Japan is concerned, they will begin a proof-of-concept from next year. A document had been sent to BIS by the Bank of Japan in October, which highlighted that they would build an asset for retail and wholesale customers.