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The Swiss National Bank (SNB) has confirmed that its ongoing pilot of wholesale central bank digital currency (CBDC) will be extended for at least two more years.
The bank will also look to open up the pilot to more financial institutions, in addition to the six that have taken part since the project was launched in December 2023.
Antoine Martin, member of the governing board of the SNB, said the success of the pilot so far has led the central bank to broaden its scope.
“The SNB hopes that additional financial institutions will participate over time, and that wholesale CBDC can be made available for a wider range of financial transactions,” he said.
“The future success of the pilot will largely depend on whether new participants join, whether the volume of transactions increases, and whether additional financial market transactions are settled on this platform.”
Martin added that the expansion of the pilot does not constitute a commitment on the part of the SNB to issue a wholesale CBDC on a permanent basis.
However, he said the pilot, which is known as Project Helvetia III, has been “very successful” so far.
Project Helvetia III in numbers
Project Helvetia is a multi-phase investigation by the SNB, the Bank for International Settlements (BIS) Innovation Hub and SIX, a Swiss financial infrastructure provider.
Phase I, concluded in December 2020, demonstrated the feasibility of settling tokenised assets in wholesale CBDC.
It also demonstrated that a platform using distributed ledger technology (DLT) could be linked to an existing central bank payment system (Switzerland’s real-time gross settlement system).
Phase II, concluded in January 2022, demonstrated that wholesale CBDC can be integrated with existing core banking systems and processes of commercial and central banks. This phase also saw end-to-end wholesale CBDC transactions conducted in a test setting.
Source: BIS
In December 2023, with the launch of Phase III, the SNB deployed its Swiss franc wholesale CBDC outside a controlled testing environment for the first time.
The SNB issues wholesale CBDC on the SIX Digital Exchange (SDX), a regulated DLT platform. Digitised, token-based Swiss franc bond transactions can therefore be settled in wholesale CBDC directly on the SDX.
With Project Helvetia III, Martin said he sees the SNB as playing a “globally leading role” by deploying wholesale CBDC in a live production environment.
Six banks are currently participating in Project Helvetia III: UBS; Commerzbank; Basler Kantonalbank; Zürcher Kantonalbank; Hypothekarbank Lenzburg; and Banque Cantonale Vaudoise.
The cantons of Basel-Stadt and Zurich, the cities of Lugano and St Gallen, and both UBS and the World Bank have each issued a bond on SDX as part of the pilot. The total value of transactions settled is around CHF750m ($833m).
A change of guard at the SNB
One week after Martin’s announcement on Project Helvetia III, the Federal Council (Switzerland's Cabinet) confirmed the replacement of current SNB chair Thomas Jordan.
On October 1, 2024, vice chair Martin Schlegel will take over from his former boss. Jordan, 61, has served as SNB chair since 2012, and he announced his retirement in March this year — four years before the end of his term in 2027.
In April, Jordan broke ranks with other central bank governors when he said the SNB currently sees “no need” for a retail CBDC.
“Retail CBDC could fundamentally alter the current monetary system and the role of central banks and commercial banks, with far-reaching consequences for the financial system,” he said.
“From a Swiss perspective, the risks of retail CBDC currently outweigh its potential benefits.”
Schlegel, 47, said in his appointment speech that he too will make financial stability a top priority as SNB chair.
A career-long SNB insider, Schlagel will be the second-youngest person to hold the position of SNB chair.
Schlegel joined the SNB as a research trainee in 2003, and then served as an economist until 2009, after which he was promoted to head of foreign exchange and gold.
In 2016, he became head of the SNB’s Singapore branch, and in 2018 he became a member of the SNB’s governing board.
