Switzerland’s central bank is reportedly planning to issue a wholesale digital currency.
The project will happen on the country’s SIX digital exchange, Swiss National Bank Chairman Thomas Jordan said Monday (June 26).
“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 Jordan, whose comments at the Point Zero Forum were reported by Reuters.
The pilot project — which the chairman said is designed to be for a limited time, at least for now — comes as a host of countries are developing a central bank digital currency (CBDC).
Related: Swiss National Bank Says Credit Suisse Crisis Revealed Regulations’ Shortcomings
Last week, International Monetary Fund (IMF) Managing Director Kristalina Georgieva noted that at least 10 central banks are “already crossing the finish line” on issuing a national digital currency, although there is “a lot that is still not decided” when it comes to organizing and regulating CBDCs.
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Her comments came as she announced that the IMF is working on a worldwide infrastructure for CBDCs, to allow for interoperability of the currencies and prevent their underutilization.
In all, the central banks of more than 100 nations are exploring what their own CBDC might look like, while each of the G7 economies has shifted from the research phase of a CBDC to the development stage, assuming they haven’t already launched concrete pilots.
The Bank of International Settlements and a working group of central banks argue that the introduction of a CBDC in their respective jurisdictions could offer an innovative opportunity for the monetary system.
These proponents also believe that the launch of a retail CBDC in particular, as opposed to a wholesale vehicle, could “rest primarily” on the future role of central bank issued money as a “public good.”
However, to get past development or piloting digital payment stages, the participating banks admit the need to focus more on design decisions as they relate to technology, end user preferences and business models, “within a final-decision-agnostic testing environment,” as PYMNTS wrote recently.
“That’s because, ultimately, CBDC issuance and design are sovereign decisions for relevant authorities based on their assessments coming out of the contemporary testing process, taken together with each individual jurisdiction’s own circumstances,” the report said.
