The Swiss National Bank (SNB) is set to launch its first real wholesale digital currency for trials with six commercial banks on the distributed ledger platform operated by SIX Digital Exchange.
The initiative, known as Helvetia Phase III, represents a significant step as the central bank transitions from testing phases to actual production, allowing wholesale Central Bank Digital Currency (CBDC) to facilitate the settlement of genuine bond transactions. The involved banks will serve as intermediaries, conducting transactions on the distributed ledger technology (DLT) platform for issuers and investors. These tokenized bonds will be settled using wholesale CBDC on a delivery versus payment basis.
The pilot, featuring real Swiss franc wholesale CBDC, is set to take place from December 2023 to June 2024 and will include Banque Cantonale Vaudoise, Basler Kantonalbank, Commerzbank, Hypothekarbank Lenzburg, UBS, and Zürcher Kantonalbank.
In March 2023, the SNB announced its intention to explore three models for settling the cash component of tokenized asset transactions. One model proposes the issuance of wholesale CBDC for this purpose; another seeks to integrate the settlement systems for tokenized assets with the existing SIC payment system; and the third suggests using private, bankruptcy-protected token money backed by central bank money.
The forthcoming pilot project will implement the first model, allowing the SNB to leverage insights gained from previous phases of Project Helvetia.
SNB Chairman Thomas Jordan stated, “With this pilot project, we are now, for the first time, making it possible to securely and efficiently settle transactions with tokenized assets on a regulated and productive DLT platform using real wholesale CBDC. We are proud of our internationally pioneering role in this area as we carry out this innovative project together with SIX and the participating banks.”