The Swiss National Bank (SNB) has been a trail blazer with its pilot wholesale central bank digital currency (wCBDC) that is being used for the settlement of tokenized securities transactions on the SIX Digital Exchange (SDX). Today the SNB published its annual report in which it outlined other related activities, including exploring what is sometimes referred to as a synthetic CBDC – a private tokenized currency backed by central bank funds.
This sounds somewhat similar to the UK’s Fnality, where UBS was one of the company’s main co-founders. Fnality operates an institutional settlement infrastructure and is deemed to be a systemically important payment system. Banks transfer money from their central bank accounts to Fnality UK where it is tokenized. So there’s a shared token, issued by a standalone company, where the transfer of the token supports instant settlement. It’s not unlike a stablecoin, but higher quality, restricted to institutional usage and always worth exactly one pound.
The Swiss central bank described this type of tokenized private money as one of three options it’s looking at for DLT settlement. Another is the wCBDC. And the third is connectivity between the SIC payment system and DLT systems, which was previously trialed as part of its Project Helvetia CBDC exploration.
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