Last week the Swiss National Bank’s chief economist Carlos Lenz stated the central bank has no plans to issue a central bank digital currency (CBDC) or digital franc. He was talking at a Swiss Bankers Association (SBA) press conference, which published a paper on the topic.
Earlier this month, it was revealed that the central bank is working with its counterpart in France to trial cross border payments using a wholesale CBDC for settling securities.
“But this is not an implementation at a production level,” said Lenz as reported by Handels Zeitung. “There are currently no plans to introduce digital central bank money. This also applies to the wholesale area.”
Meanwhile, both Lenz and the SBA paper highlight there is no pressure or urgency for Switzerland to introduce a CBDC. The central bank economist doesn’t see risks from a foreign CBDC and noted there were concerns when the euro was introduced, but those fears did not crystallize.
However, the SBA warned of the perils of inaction. “The option of ‘doing nothing’ should also be carefully examined,” says the SBA. “In the absence of a modern means of payment, the digitization of the economy and business models would proceed more slowly and thus compromise Switzerland’s competitiveness.” And it warned that a vacuum in Switzerland could mean Swiss citizens adopt foreign digital currencies or platforms.
The rest of the SBA paper presented a reasonably balanced view on CBDC, with the usual concerns about the impact on banks. It ultimately favored bank issued stablecoins.
The Swiss National Bank’s views aren’t entirely new. At the end of last year, it published the results of Project Helvetia, a wholesale CBDC trial for settling blockchain-based securities with the SIX Digital Exchange (SDX) and the BIS. The conclusion was the test was successful but more work was needed. Given there will be no central bank money in time for the launch of the SDX, the digital exchange will tokenize participant balances creating digital money via a connection with the real-time gross settlement system SIC.