tl;dr
The Swiss National Bank (SNB) is pursuing asset tokenization using central bank money to enhance financial stability. The project, called Helvetia III, involves live pilots with participating banks settling transactions using Swiss franc wholesale central bank digital currency (CBDC) on the SIX Digi...
SNB Chairman Thomas Jordan has revealed the bank's strategic move towards asset tokenization using central bank money to enhance financial stability. The Helvetia III project, pioneering tokenized asset transactions, involves Swiss franc wholesale central bank digital currency (CBDC) settlements on the SIX Digital Exchange (SDX) with participating banks. This leverages blockchain technology to improve financial market operational efficiency.
The project demonstrates the practical utility of wholesale CBDCs in a real-world environment and shows the SNB's proactive approach to technological advancements aligning with maintaining monetary and financial stability. Chairman Jordan emphasized the importance of settling transactions in central bank money and highlighted alternative settlement methods to wholesale CBDC to address fragmentation issues in financial markets.
At a recent summit in Basel, Jordan outlined the SNB's assessment of various methods to facilitate transactions using tokenized assets through central bank money, aiming to eliminate credit and liquidity risks while reinforcing the stability of the monetary system.
Helvetia III, initiated in December 2023, has successfully facilitated multiple bond issuances and secondary market transactions, marking a milestone in demonstrating the practical utility of wholesale CBDCs in a real-world environment.
Jordan also discussed alternative settlement methods to wholesale CBDC, focusing on linking tokenized asset platforms with the Swiss RTGS system and utilizing privately issued token money, addressing fragmentation issues in financial markets. The SNB's exploration into tokenization and its potential implications for monetary policy and financial stability reflects a proactive approach to technological advancements, aligning with its mandate of maintaining monetary and financial stability.
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