BIS, Swiss National Bank and SIX Completes Wholesale CBDC Experiment

The Bank for International Settlements' Innovation Hub (BISIH) Swiss Centre, the Swiss National Bank (SNB) and the financial infrastructure operator SIX announced on Thursday the successful completion of a joint proof-of-concept experiment that integrates tokenised digital assets and central bank money.

Project Helvetia (The experiment) explored the technological and legal feasibility of transferring digital assets through issuing a wholesale CBDC onto a distributed digital asset platform and by linking the digital asset platform to the existing wholesale payment system. It demonstrated the feasibility and legal robustness of both alternatives in a near-live setup.

Benefits and challenges of the two were also revealed in comparison. A wholesale CBDC has potential advantages when settling digital assets. Yet it would raise major policy and governance hurdles. Linking existing systems to new DLT platforms would avoid many of these problems, but would forgo the potential benefits of full integration. It is worth noting that Project Helvetia explored a wholesale CBDC, restricted to banks and other financial institutions. A retail or general purpose CBDC would address different use cases and have very different policy implications.

Additionally, the banks and the exchange highlighted in their announcement that the proofs of concept are experiments conducted at the BISIH and should not be interpreted as an indication that the SNB is to issue wholesale CBDCs onto SIX Digital Exchange's (SDX) platform or to allow settlement of SDX transactions in the Swiss Interbank Clearing system. 

According to the research Union, further work is needed; the next steps are to gain a better understanding of the practical complexities and policy implications of wholesale CBDC. Different design choices that allow for trade-offs between risks and benefits need to be explored.