Switzerland unveils bold pilot plan for CBDC

Switzerland, like several governments, is actively working to integrate the CBDC into its financial system. However, his ambition is not to embark on a retail CBDC project, deemed too risky.

A wholesale CBDC: the central bank wants to test the market

The Swiss National Bank (SNB) wants to materialize its intentions regarding the issuance of a wholesale central bank digital currency (CBDC). Monday, June 26, the financial institution revealed its plan to launch a pilot project in this sense.

According to the explanations of Thomas Jordan, the director of the SNB, the initiative will only focus on wholesale CBDCs. Unlike user-focused retail Central Bank Digital Currencies, wholesale CBDCs are reserved for financial institutions.

Thus, wholesale CBDCs cover financial transactions between financial institutions and central banks. This choice is not trivial since the SNB considers that retail CBDCs are too risky to be tested.

Those that will be carried out as part of the CBDC pilot project envisaged by the SNB will be managed by the SIX digital platform. No calendar has filtered as to the launch of the operation. When it is, the latter should only work for a limited period.

According to other details provided by the boss of BNS, this project is not experimental. This, especially since it should involve the actual use of a fiat currency. The objective is to test, in a real situation, the operation of the asset.

“This is not just an experiment, it will be real money equivalent to bank reserves and the aim is to test real transactions with market participants” explained the head of the SNB.

We imagine that if the experiment is conclusive, the SNB would consider deploying retail CBDCs. For now, we are not there yet. According to the statements of one of the executives of the Swiss bank, the latter does not plan to replace cash with a CBDC. However, this option cannot be ruled out.