Industry trio complete tested integration of wholesale CBDC settlement with commercial banks
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Industry trio complete tested integration of wholesale CBDC settlement with commercial banks 26 January 2022Switzerland Reporter: Jenna Lomax
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The Bank of International Settlements (BIS), Swiss National Bank (SNB) and SIX Swiss Exchange (SIX) have successfully completed the second phase of Project Helvetia — a tested integration of wholesale central bank digital currency (CBDC) settlement with commercial banks.
Phase II continues the exploration of tokenised asset settlement in wholesale CBDC that was started by Project Helvetia Phase I in 2020. The project looks toward a future in which more financial assets are tokenised and financial infrastructures run on distributed ledger technology (DLT).
Project Helvetia’s recently completed second phase explored the settlement of interbank, monetary policy and cross-border transactions on the test systems of SIX Digital Exchange (SDX), the Swiss real-time gross settlement system – SIX Interbank Clearing – and core banking systems.
The experiment, carried out during the fourth quarter of 2021, also included five commercial banks: Citi, Credit Suisse, Goldman Sachs, Hypothekarbank Lenzburg and UBS.
In the first phase of Project Helvetia, BIS Innovation Hub Swiss Centre, SIX and the SNB explored different ways of settling tokenised assets with central bank money in the test environment of the SDX platform.
Phase I and Phase II show that both ways to settle tokenised assets in central bank money are feasible and legally effective under Swiss law.
While none of the existing DLT-based platforms are systemic yet, they may become so in the future, this means that central banks may need to extend monetary policy implementation to tokenised asset markets, says BIS, SNB and SIX.
As an experiment, Project Helvetia is of an exploratory nature and should not be interpreted as an indication that the SNB plans to issue a wholesale CBDC, the national bank adds.
Currently, international regulatory standards suggest that operators of systemically important infrastructures should settle obligations in central bank money whenever practical and available.
The news comes in the same weeks that The Bank of International Settlements’ Innovation Hub announced it would be launching new projects focusing on central bank digital currencies, decentralised finance and the development of next generation payments systems during 2022.
Jos Dijsselhof, CEO of SIX, says: “SIX is proud to collaborate with the BIS Innovation Hub and the SNB and contribute to Project Helvetia by leveraging SDX, the world’s first regulated DLT-based financial market infrastructure. The project demonstrates that the SDX platform supports wholesale CBDC for settling tokenised assets end-to-end.”
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