The decision to prioritize wholesale CBDCs, which involve tokenized securities, showcases the SNB’s commitment to thoroughly assess and manage any associated risks before considering the introduction of retail CBDCs. The Swiss National Bank (SNB) is set to create a digital currency known as a wholesale central bank digital currency (wCBDC). According to a Reuters report, the announcement was made by the head of SNB, Thomas Jordan, during a Point Zero conference in Zurich yesterday, 26 June. wCBDC by Swiss National Bank The wCBDC will be issued on the SIX digital exchange, the largest stock exchange in Switzerland, as part of a pilot program. Jordan said the project would begin soon and is scheduled to run for a limited time. The goal is to understand how the wCBDC performs in practical
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The decision to prioritize wholesale CBDCs, which involve tokenized securities, showcases the SNB’s commitment to thoroughly assess and manage any associated risks before considering the introduction of retail CBDCs.
The Swiss National Bank (SNB) is set to create a digital currency known as a wholesale central bank digital currency (wCBDC). According to a Reuters report, the announcement was made by the head of SNB, Thomas Jordan, during a Point Zero conference in Zurich yesterday, 26 June.
wCBDC by Swiss National Bank
The wCBDC will be issued on the SIX digital exchange, the largest stock exchange in Switzerland, as part of a pilot program. Jordan said the project would begin soon and is scheduled to run for a limited time. The goal is to understand how the wCBDC performs in practical transactions with market participants.
“This is not just an experiment. It will be real money equivalent to bank reserves, and the objective is to test real transactions with market participants,” said the SNB Chairman.
The move by the SNB reflects an increasing trend among central banks to explore and develop digital currencies. These virtual assets are gaining popularity due to their potential to streamline financial processes and improve cross-border payments. Switzerland, known for its financial innovation, aims to leverage this technology to enhance its financial economy.
The Swiss bank began the wCBDC campaign last year. In January, the bank announced the integration of the digital asset into five commercial banks, including Citi, Credit Suisse, and Goldman Sachs, as part of the second phase of its Project Helvetia.
SNB incorporated the wCBDC into the banks’ existing back-office systems and processes.
Aside from Switzerland, other countries such as the United Kingdom, Russia, Japan, India, and even China are exploring the use of central bank-issued virtual assets for cross-border payments.
The International Monetary Fund (IMF) also recently released a blueprint for CBDC creation in compliance with regulatory requirements. The IMF plans to develop a global platform where users can interact with CBDC.
SNB Remains Cautious of Public CBDC
Despite its plans to explore wCBDC, SNB has remained cautious when it comes to the implementation of public or retail central bank digital currencies (CBDCs), in contrast to its involvement with wholesale CBDCs.
The SNB Chairman has expressed concerns regarding the potential risks that retail CBDCs might introduce to the financial system, mainly due to the challenges associated with control and oversight.
Jordan acknowledged that the bank does not completely rule out the future introduction of retail CBDCs. However, he emphasized the current prudence exercised by the bank in approaching this area of digital currency.
“We do not exclude that we will never introduce retail [CBDCs], but nevertheless, we are a little bit prudent at the moment,” he said.
The decision to prioritize wholesale CBDCs, which involve tokenized securities, showcases the SNB’s commitment to thoroughly assess and manage any associated risks before considering the introduction of retail CBDCs. By focusing on this approach, the SNB aims to gain a comprehensive understanding of the potential benefits and challenges of digital currencies while safeguarding the stability of Switzerland’s financial system.
Chimamanda is a crypto enthusiast and experienced writer focusing on the dynamic world of cryptocurrencies. She joined the industry in 2019 and has since developed an interest in the emerging economy. She combines her passion for blockchain technology with her love for travel and food, bringing a fresh and engaging perspective to her work.