Securities Finance Industry News | Industry Trio Completes Tested CBDC Wholesale Settlement Integration with Commercial Banks

Industry Trio Completes Tested CBDC Wholesale Settlement Integration with Commercial Banks

The Bank for International Settlements (BIS), the Swiss National Bank (SNB) and SIX Swiss Exchange (SIX) have successfully completed the second phase of the Helvetia project – a tested integration of central bank digital currency (CBDC) wholesale settlement with commercial banks.

Phase II continues the exploration of tokenized asset settlement in wholesale CBDCs that was initiated by the Helvetia Phase I project in 2020. The project looks to a future in which more financial assets are tokenized and infrastructure financial services run on distributed ledger technology (DLT).

The Helvetia Project initiative explored the settlement of interbank, monetary policy and cross-border transactions on the test systems of SIX Digital Exchange (SDX), the Swiss real-time gross settlement system – SIX Interbank Clearing – and central banking systems.

The experiment, conducted during the fourth quarter of 2021, also included five commercial banks: Citi, Credit Suisse, Goldman Sachs, Hypothekarbank Lenzburg and UBS.

In the first phase of the Helvetia project, BIS Innovation Hub Swiss Centre, SIX and the SNB explored different ways to settle tokenized assets with central bank money in the test environment of the SDX platform.

Phase I and Phase II show that both modes of settlement of tokenized assets in central bank money are feasible and legally effective under Swiss law.

Although none of the existing DLT-based platforms are yet systemic, they may become so in the future, this means that central banks may need to extend the implementation of monetary policy to financial markets. symbolic assets, according to the BIS, the SNB and SIX.

As an experiment, the Helvetia project is exploratory in nature and should not be interpreted as an indication that the SNB plans to issue a wholesale CBDC, the national bank adds.

Currently, international regulatory standards suggest that systemically important infrastructure operators should settle their obligations in central bank money whenever possible and available.

The news comes in the same weeks as the Bank for International Settlements’ Innovation Hub announced it would be launch of new projects focusing on central bank digital currencies, decentralized finance and the development of next-generation payment systems in 2022.

Jos Dijsselhof, CEO of SIX, said: “SIX is proud to collaborate with the BRI Innovation Hub and the SNB and contribute to Project Helvetia by leveraging SDX, the first DLT-based regulated financial market infrastructure. The project demonstrates that the SDX platform supports wholesale CBDC to settle end-to-end tokenized assets.

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