Swiss National Bank, Citigroup, and Goldman Tested a Joint CBDC Project: Report

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The Swiss Nation­al Bank (SNB), togeth­er with five oth­er bank­ing giants, have report­ed­ly test­ed whether they can process cen­tral bank dig­i­tal cur­ren­cies with­in the nation’s finan­cial net­work. The insti­tu­tions revealed they were able to inte­grate CBD­Cs into their exist­ing core bank­ing systems.

The Latest CBDC Trial in Switzerland

A Jan­u­ary 13 cov­er­age by Bloomberg dis­closed that Switzerland’s cen­tral bank and five com­mer­cial banks suc­cess­ful­ly employed CBD­Cs to set­tle trans­ac­tions. These large insti­tu­tion includ­ed Cit­i­group Inc, UBS Group AG, Gold­man Sachs Group Inc, Cred­it Suisse Group AG, and Hypothekar­bank Lenzburg AG.

The banks con­duct­ed the tri­al as part of an exper­i­ment known as “Project Hel­veti­ca,” which aims to iden­ti­fy the details around issu­ing whole­sale cen­tral bank dig­i­tal currencies.

The SNB point­ed out that none of the exist­ing cryp­tocur­ren­cy plat­forms are “sys­temic” to sup­port CBDC set­tle­ments as of the moment. As such, the goal of the test was to deter­mine whether those exchanges can inte­grate such func­tions. Andrea Maech­ler – Gov­ern­ing Board Mem­ber of the Swiss Nation­al Bank – said:

“It allowed the SNB to deep­en its under­stand­ing of how the safe­ty of cen­tral-bank mon­ey could be extend­ed to tok­enized asset markets.”

It remains unclear when the team will launch the next phase of “Project Hel­veti­ca.” Despite being suc­cess­ful, there are still some issues which the tri­al did not cov­er. These include cyber­se­cu­ri­ty and pro­cess­ing a large num­ber of transactions.

The group out­lined that the project remains “an explorato­ry nature,” and peo­ple should not inter­pret that the nation’s cen­tral bank will issue a whole­sale CBDC.

France Also Tested Its CBDC

Switzer­land is not the only Euro­pean coun­try to con­duct exper­i­ments on its dig­i­tal form of nation­al cur­ren­cy. In Octo­ber last year, Banque de France – the French cen­tral bank – com­plet­ed a sim­i­lar 10-month test. The project was led by the Bel­gian finan­cial ser­vices com­pa­ny Euro­clear, while many lead­ing local banks par­tic­i­pat­ed, too.

Through­out the exper­i­ment, the insti­tu­tions exam­ined how a CBDC will inter­act with France’s debt mar­ket. They trad­ed gov­ern­ment bonds and set­tled the trans­ac­tions with the finan­cial prod­uct issued by the cen­tral bank over the 10-month tri­al program.

The project also test­ed the use­ful­ness of such a dig­i­tal token on a range of every­day activ­i­ties such as pay­ing coupons, issu­ing new bonds, redeem­ing deals, and respec­tive­ly employ­ing them in repur­chase agreements.

Isabelle Delorme – Deputy Chief Exec­u­tive of Euro­clear France – described the ini­tia­tive as a suc­cess. She said it showed that “the cen­tral bank dig­i­tal cur­ren­cies can set­tle cen­tral bank mon­ey safe­ly and securely.”

Fea­tured Image Cour­tesy of Cen­tral Banking

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