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Swiss National Bank trials CBDCs for settlement of real bond transactions

By Alexandra Leonards

Switzerland’s central bank is launching a new trial in which it will test a wholesale central bank digital currency (CBDC) in real-life environments.

The trial, which will be carried out alongside six commercial banks, will mark the first time a real wholesale CBDC has been issued in Swiss francs on a financial market infrastructure based on distributed ledger technology (DLT).

Swiss National Bank (SNB) said that this means it is moving its work away from test environments and into real production, making wholesale CBDC available for the settlement of real bond transactions.

However, it added that the pilot doesn't mark a commitment on behalf of the bank to introduce the digital currency on a permenant basis.

The banks involved in the trial – Banque Cantonale Vaudoise, Basler Kantonalbank, Commerzbank, Hypothekarbank Lenzburg, UBS and Zürcher Kantonalbank – will carry out transactions on the DLT platform as intermediaries for issuers and investors.

The tokenised bonds will be settled against wholesale CBDC on a delivery-versus-payment basis.

Chairman of the SNB's governing board Thomas J. Jordan said that the central bank has been testing a variety of potential wholesale CBDC applications for several years.

"With this pilot project, we are now, for the first time, making it possible to securely and efficiently settle transactions with tokenised assets on a regulated and productive DLT platform using real wholesale CBDC," said the chairman.

The pilot is scheduled to run from December 2023 to June 2024.

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