Switzerland made another step to clarify its plan for integrating central bank digital currency, or CBDCs into the existing financial system.
The second phase of Project Helvetia was completed by the Swiss National Bank (SNB), which is the country’s central banking institution. It integrated a wholesale CBDC in the back-office systems of five banks, Hypothekarbank Lenzburg, Goldman Sachs and Citi.
In Phase 2, Project Helvetia’s second quarter 2021, the Bank for International Settlements joined SIX as a partner of SNB.
Project Helvetia is a multi-phase investigation on the settlement of tokenized assets within central bank money. It aims to prepare central banking institutions for a future in which distributed ledger technology-based tokenized financial asset are the norm. Project Helvetia focuses on resolving operational, legal, and policy-related settlement issues. Officially, the announcement stated that although there is no DLT-based systemic platform currently in place, it doesn’t necessarily mean that such platforms won’t exist in the future.
The experiment was a success in Switzerland because a wholesale CBDC, which is used to settle interbank transfers, can be issued on a distributed DLT platform owned and operated by a private company.
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According to the announcement, the second phase of Project Helvetia focused on interbank, monetary and cross-border transactions using the SIX Digital Exchange and SIX Interbank Clearing test systems. These systems are the Swiss real-time gross settle system and core banking systems.
Andrea Maechler, a member of the SNB’s governing board, stated that central banks must keep up with technological changes in order to fulfill their mandates of ensuring financial stability and monetary stability. She went on:
Project Helvetia is an excellent example of this. This allowed the SNB to understand how central bank money safety could be extended to tokenized asset market.
Project Helvetia’s first phase was completed in December 2020. It consisted of issuing a wholesale CBDC.