The Banque de France, Swiss National Bank and the BIS Innovation Hub have announced they will trial a wholesale central bank digital currency (CBDC).
Banque De France, Swiss National Bank and BIS enter CBDC trial
The trial aims to use the digital Swiss Franc and digital Euro to settle cross border trades for financial instruments such as stock or bonds on a blockchain.
Other participants in the Project Jura trial for cross border settlements are Accenture and its consortium of Credit Suisse, Natixis, R3, SIX Digital Exchange and UBS.
These participants are also part of Accenture’s consortium for wholesale digital Euro experiments at the Banque de France.
The French central bank created eight consortia in one of the largest central bank digital currency trials to date. Recently it provided a CBDC to settle the public blockchain bond issue by the European Investment Bank.
Using distributed ledger technology enables instant settlement or delivery versus payment (DvP) of a stock trade.
This is an atomic transaction, so if one part of the transaction fails, such as transferring the asset or payment, both sides fail.
A potential advantage of this sort of trade is it reduces the need for central counterparties who exist to deal with credit risks when transactions fail.
“The Swiss National Bank is already investigating the settlement of tokenised assets with wholesale CBDC as part of Project Helvetia. We are looking forward to expanding this analysis to a cross-border context by participating in this exciting initiative,” said Andréa M. Maechler, Member of the Governing Board, Swiss National Bank.
Six months ago, the Swiss National Bank shared the results of Project Helvetia, where the conclusion was it was a success, but more work is needed.
This was perhaps disappointing for the SIX Digital Exchange (SDX), which is planning to launch its digital asset exchange soon. Instead, the SDX plans to use its own SDX coin backed by deposits at the central bank.
Benoît Cœuré, Head of the BIS Innovation Hub, also involved in Project Helvetia, observed that Project Jura complements other BIS work that targets a G20 goal to improve cross border payments.
The central banks made clear they don’t want the tests to be interpreted as a decision to launch a CBDC.
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