The Swiss National Bank (SNB), like many other central banks, is actively exploring digital central bank currencies (CBDCs). The SNB has announced plans to introduce a real wholesale CBDC on the SDX platform for specific transactions in the coming months.
Throughout this year, numerous countries have made notable advancements in the development of digital central bank currencies. The growing trend of CBDC adoption is evident, with over 65 countries currently in advanced stages of CBDC development and more than 20 central banks initiating pilot projects. Switzerland has also placed significant emphasis on researching digital central bank currencies, as demonstrated by the SNB's "Helvetia" and "Jura" projects.
While CBDCs offer several advantages, their implementation also presents risks that must be carefully considered, particularly concerning their impact on the financial system. Thomas Moser, an alternate member of the SNB's Governing Board, expressed concerns about CBDCs potentially competing with commercial banks' book money, leading to potential losses in customer funds during uncertain times. Moser emphasizes that the resemblance of CBDCs to sight deposits in functionality increases this risk. However, he suggests that a wholesale CBDC model, accessible only to regulated financial institutions and not the general public, would have minimal immediate effects while allowing for secure blockchain utilization within the existing financial system.
Regarding the coexistence of stablecoins and CBDCs, Moser believes it is conceivable since stablecoins on the blockchain resemble traditional bank money. However, he points out that stablecoins would need to offer added value compared to CBDCs to ensure customers' preference for the bankruptcy-proof CBDC.
Moser further explains that the SNB is actively experimenting with the wholesale model, intending to provide a CBDC exclusively to regulated financial market institutions, similar to the current setup of accounts at the SNB. The ongoing work aligns with the practical relevance of introducing a wholesale CBDC, especially given Switzerland's existing regulated blockchain-based exchange, the SDX. The SNB's reports on the "Helvetia" and "Jura" projects demonstrate technical feasibility. Moser assures that real wholesale CBDCs will be issued on the SDX for selected transactions later this year.
The SNB's exploration of CBDCs and its commitment to practical implementation showcase Switzerland's proactive approach to technological advancements in the financial sector, ensuring continued innovation and potential benefits for the country's financial system.
