Capital markets News

World Bank mulls issuing Swiss digital bond settling in wholesale CBDC

World bank familiar

During a Swiss National Bank event, Jorge Familiar, the World Bank’s treasurer, considered the possibility of issuing a Swiss Franc digital bond. The appeal is to settle with a wholesale central bank digital currency (CBDC). Switzerland is currently piloting a wholesale CBDC as part of Project Helvetia III. So far, the digital Swiss Franc has been used to settle four municipal bonds.

In 2018 the World Bank issued a digital bond in Australia. At the time Commonwealth Bank claimed it as a first because the entire process was on blockchain, not a mirror of another system. While it used a permissioned DLT for the record keeping, it wasn’t tokenized.

Last year, the World Bank issued a token-based digital bond, the first to use Euroclear’s D-FMI DLT platform.

“I think that the next logical step is to do one with a central bank digital currency,” said Mr Familiar yesterday.

He outlined how the World Bank did the very first currency swap involving Swiss francs and Deutsche marks. As the Deutsche mark no longer exists, he sees the Swiss Franc as the way to go.

“We are clearly looking with interest to what’s going on here in Switzerland (with the CBDC trials),” said Mr Familiar. “And if market conditions allow for it, I mean, why not? We would certainly be interested in exploring something.”

If the World Bank isn’t already in discussion with the SIX Digital Exchange (SDX), the DLT operator for the CBDC trials, we suspect it is now.

Mr Familiar also discussed the World Bank initiative with the BIS Innovation Hub to use DLT for promissory notes. That work is also happening in Switzerland. He was talking during the Swiss National Bank’s excellent event, “Towards the future of the monetary system.”

Image Copyright: Swiss National Bank