The Swiss National Bank (SNB) has announced the upcoming pilot issuance of a wholesale central bank digital currency (CBDC) on the SIX digital exchange. The bank’s chairman, Thomas Jordan, revealed the news at the Point Zero Forum in Zurich on Monday.
Unlike a simple experiment, this project will involve the creation of real money equivalent to bank reserves. The intent is to put these funds to the test in real transactions with market participants.
Although the project, set to kick off soon, is currently time-bound, it marks a crucial venture into the digital currency world for SNB.
Digital renditions of their respective currencies are under examination by numerous central banks globally. This is an attempt to avoid surrendering digital payments entirely to the private sector, especially as cash usage sees a sharp decline, further accelerated by the COVID-19 pandemic.
However, the SNB remains apprehensive about the use of public, or retail, CBDCs, in contrast to the wholesale CBDCs, which utilize tokenized securities. Jordan voiced his concerns about the potential risks that retail CBDCs could pose to the financial system and the more challenging control over their usage.
Also Read: IMF’s Global CBDC Platform in Progress
While considering the adoption of digital currencies, the SNB still doesn’t foresee the complete elimination of cash in Switzerland, as stated by the central bank’s governor, Andrea Maechler.
