BIS Innovation Hub Completes Wholesale CBDC Experiment

BIS Innovation Hub, the Swiss National Bank, and SIX compared the feasibility of issuing a wholesale CBDC versus linking the existing payment system to a distributed ledger.

The BIS Innovation Hub Swiss Centre, SNB (Swiss National Bank) and financial infrastructure operator SIX have completed a joint proof-of-concept experiment that integrates tokenised digital assets and central bank money.

Project Helvetia explored the technological and legal feasibility of transferring digital assets though two approaches: issuing a wholesale CBDC onto a distributed digital asset platform, and linking the existing payment system to a distributed ledger.

Both alternatives demonstrated feasibility and legal robustness in a near-live setup, however comparing them revealed benefits and challenges, the Innovation Hub said.

While a wholesale CBDC has potential advantages when settling digital assets, it would raise major policy and governance hurdles. On the other hand, linking existing systems to new DLT platforms would avoid many of these problems, but this approach would forgo the potential benefits of full integration.

The statement said further work is needed to gain a better understanding of the practical complexities and policy implications of a wholesale CBDC, the different design choices, and the risk-benefit trade-offs of these design choices.

“If wholesale CBDCs are to fulfil their potential as a new means of settlement, their design and implications deserve close study and consideration,” said Benoît Cœuré, Head of the BIS Innovation Hub. “This is only possible via continued deliberations and experimentations among central banks and with other stakeholders, such as market supervisors and the private sector.”

Project Helvetia was the first wholesale CBDC experiment by the SNB and complements the planned launch of SDX (SIX Digital Exchange).

The detailed report on the project is available here.

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