Banking News

Swiss National Bank, SIX, BIS partner for central bank digital currency

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Yesterday, the Swiss National Bank (SNB) announced that it has signed an operational agreement with the Bank of International Settlements (BIS) to explore digital currencies. A BIS Innovation Hub Centre will be established in Switzerland, where the central bank and stock exchange owner SIX will collaborate on blockchain-based digital assets.

The BIS plans to launch Innovation Hub Centres in Hong Kong, Singapore, and Switzerland for central bank technology projects. The Swiss branch will focus on central bank digital currency (CBDC) and monitoring markets in real-time.

“The SNB has for some time been closely following the digitalisation of the financial sector and technological innovations in the areas covered by its mandate,” stated Thomas Jordan, Chair of the SNB’s Governing Board.

So the Swiss central bank looks to be cementing its position as one of the 70% exploring CBDCs, according to the BIS. Plus we know it’s blockchain-based, as they will look at “integration of digital central bank money into a distributed ledger technology infrastructure”.

The SNB and SIX will apply the currency to the settlement of tokenized assets using a CBDC, rather than consumer-focused money like China. This makes sense considering the BIS’s involvement. Especially so since the body’s General Manager, Agustín Carstens, outlined the risks of a tokenized consumer currency earlier this year.

Yesterday, Carstens said: “We are very proud that one of the first three Hub Centres will be here in Switzerland, where the BIS has been based for nearly 90 years. Switzerland is a hotbed of innovation.”

The SNB and financial authority FINMA regulate SIX. Since SIX’s announcement of a DLT based digital stock exchange last year, it plans to tokenize shares of Nestle and Novartis and has attracted the likes of JP Morgan and Credit Suisse.

The departure of its CEO two months ago and waiting for new regulations contributed to delays, with the exchange planned for release next year. However, SIX reached a significant milestone when it announced a working prototype two weeks ago, which included a DLT securities depository.

FINMA, meanwhile, has granted payments licenses to two digital asset firms, Sygnum and SEBA Crypto. It has not yet done the same for Facebook’s cryptocurrency project Libra, which applied last month.