The Bank for International Settlements’ (BIS) Innovation Hub joined the Swiss National Bank (SNB) and financial infrastructure operator, SIX, in an experiment that integrates tokenized digital assets and central bank money.
SNB announced that it has carried out a successful test of a centrally-issued digital currency.
According to BIS, the test which is named ‘Project Helvetia’Â explored the technological and legal feasibility of transferring digital assets through issuing a wholesale CBDC onto a distributed digital asset platform and linking the digital asset platform to the existing wholesale payment system.
“The initiative demonstrated the feasibility and legal robustness of both alternatives in a near-live setup,” BIS said.
However, it ackowledge several challenges that could arise.
“A wholesale CBDC has potential advantages when settling digital assets. Yet it would raise major policy and governance hurdles. Linking existing systems to new DLT platforms would avoid many of these problems, but would forgo the potential benefits of full integration,” it noted.
The project Helvetia explored a wholesale CBDC, restricted to banks and other financial institutions, and a retail or general-purpose CBDC is expected to address different use cases and have very different policy implications.
The proofs of concept are experiments conducted at the BISIH and should not be interpreted as an indication that the SNB is to issue wholesale CBDCs onto SIX Digital Exchange’s (SDX) platform or to allow settlement of SDX transactions in the Swiss Interbank Clearing system.