The Bank for International Settlements’ Innovation Hub (BISIH) Swiss Centre, the Swiss National Bank (SNB) and the financial infrastructure operator SIX announced the successful completion of a joint proof-of-concept experiment that integrates tokenised digital assets and central bank money. Project Helvetia explored the technological and legal feasibility of transferring digital assets through the issuing a wholesale CBDC onto a distributed digital asset platform; and linking the digital asset platform to the existing wholesale payment system.
The initiative demonstrated the feasibility and legal robustness of both alternatives in a near-live setup. However, comparing them reveals benefits and challenges. A wholesale CBDC has potential advantages when settling digital assets. Yet it would raise major policy and governance hurdles. Linking existing systems to new DLT platforms would avoid many of these problems, but would forgo the potential benefits of full integration. Project Helvetia explored a wholesale CBDC, restricted to banks and other financial institutions. A retail or general purpose CBDC would address different use cases and have very different policy implications.
The proofs of concept are experiments conducted at the BISIH and should not be interpreted as an indication that the SNB is to issue wholesale CBDCs onto SIX Digital Exchange’s (SDX) platform or to allow settlement of SDX transactions in the Swiss Interbank Clearing system.
If wholesale CBDCs are to fulfil their potential as a new means of settlement, their design and implications deserve close study and consideration. This is only possible via continued deliberations and experimentations among central banks and with other stakeholders, such as market supervisors and the private sector. Given the speed of digital transformation, central banks – and others – need to learn fast to make informed policy decisions.
