The Swiss National Bank announced on Thursday, January 13th that it has successfully used central bank digital currencies to settle transactions with five different commercial banks.
Central bank coins refer to central bank digital currencies, or the bank’s answer to cryptocurrencies.
Swiss central bank
The latest experiment, known as Project Helvetia, was conducted by the Swiss Central Bank and could pave the way for the implementation of a digital currency (CBDC) in Switzerland. This will allow the country to conduct some of the most advanced CBDC testing in Europe, according to their press release.
Central banks around the world are doing their best to at least research a central bank digital currency, and some are already developing it. The goal is in part to improve the efficiency of existing payment systems and address the challenges of cryptocurrency.
What is the Helvetia Project?
As part of the Helvetia project, named after the national emblem of Switzerland, the Swiss National Bank has integrated central bank digital currencies into payment systems and used them to simulate transactions in an experiment that includes UBS, Credit Suisse, Goldman Sachs, Citigroup and Hypothekarbank Lenzburg.
The project showed that it is possible to make direct payments ranging in size from 100,000 to 5 million Swiss francs (about 5 million euros).
Benoit Coeuré is the head of the Innovation Center at the Bank for International Settlements (BIS), and his bank was also involved in the trial. In his words:
“We have shown that innovation can be harnessed to preserve the best elements of the existing financial system, including settlement in central bank money, with the potential to unlock new benefits.”
wholesale and stock
Swiss exchange SIX, the main provider of financial infrastructure services in Switzerland, also took part in the three-day trial at the end of 2021.
As part of these purchases, central bank digital currencies were issued and redeemed by wholesalers, and were also used to make payments and settle transactions involving the acquisition of securities, both inside and outside Switzerland.
two copies
As it stands, two versions of CBDCs have been tested. So-called large CBDCs, which are intended to make large-scale payments between banks or other organizations that have central bank accounts. Consumers and businesses have a different version of everyday transactions.
The next step is to evaluate the test. The Helvetia Committee will subsequently decide on the following actions.
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