Banks ‘successfully’ integrate wholesale CBDC in back-office systems

The Bank for International Settlements (BIS), Swiss National Bank (SNB), and SIX Swiss Exchange have announced the successful test of wholesale Central Bank Digital Currency (CBDC) in the back-office systems and processes of five commercial banks.

The move is part of Project Helvetia, which aims to test tokenised financial assets based on distributed ledger technology that can co-exist with current systems.

The second phase of the project is the joint experiment of BIS, SNB, and SIX - Switzerland’s main provider of financial infrastructure services - which also included Citi, Credit Suisse, Goldman Sachs, Hypothekarbank Lenzburg, and UBS.

Puneet Singhvi, head of digital assets, ICG at Citi said that collaborating with partners on digital asset solutions is an important part of its strategy.

“The findings of Project Helvetia Phase II are a positive step forward in demonstrating that wholesale central bank digital currencies can be integrated into central and commercial banking systems,” added Singhvi.

While integrating a wholesale CBDC into existing systems is complex, the consortium said that phase 2 of the project revealed that this is operationally possible. It added that issuing this form of digital currency on a distributed ledger technology (DLT) platform operated by a private sector company is feasible under Swiss law.

“We have demonstrated that innovation can be harnessed to preserve the best elements of the current financial system, including settlement in central bank money, while also potentially unlocking new benefits,” said Benoît Cœuré, head of the BIS Innovation Hub. “As DLT goes mainstream, this will become more relevant than ever.”

Andréa M. Maechler, member of the governing board at SNB, warned that to ensure financial stability, central banks need to “stay on top of technological change”.

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