Blockchain for Banking News

Basel, Zurich tokenized bonds settle with Swiss wholesale CBDC

Basel Switzerland

We previously reported plans to settle a tokenized bond issuance by the Canton of Zurich with a wholesale Swiss Franc. Additionally, the City of Basel issued a CHF 105 million bond, using the wholesale central bank digital currency (wholesale CBDC) for settlement. Both transactions occurred last Friday.

Basel’s bond was issued via the Basler Kantonalbank.

The transactions were part of Helvetia III, a production grade wholesale CBDC pilot. It involves the Swiss National Bank and the SIX Digital Exchange (SDX). It uses the same infrastructure normally used by SDX to tokenize Swiss Francs backed by a central bank balance. In this case, the issuer is the central bank rather than SDX. 

On chain cash enables the full efficiency benefits of DLT. These include atomic settlement and reducing the need for reconciliations with a bank account.

“A strong collaboration amongst participants of the Swiss financial center led to the successful start of the Helvetia III pilot,” said David Newns, Head of SIX Digital Exchange. “As the most ambitious wCBDC project in the history of capital markets, the settlement of the first securities transactions in wCBDC in a developed economy on regulated blockchain based infrastructure in a production environment represents a major milestone for the entire industry on the road of adoption of a tokenized, DLT based financial markets infrastructure.”

Investors can hold both bonds at the central securities depository of SDX or the main SIX SIS. And traders can buy either of the bonds on SDX or the main SIX Swiss Exchange.

The coming wave of tokenization

SDX is using R3’s Corda enterprise blockchain. “The tokenization of assets will bring huge benefits to institutions operating in regulated financial markets, such as access to new sources of liquidity, improved capital efficiency and enhanced transparency and risk management,” said R3 CEO David Rutter.

“This issuance is one of a series of live trials, as part of Helvetia Phase III, and represents another key milestone for the wider development of wholesale CBDC and digital assets which will importantly be used in a live production environment.” 

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