Switzerland’s central bank has successfully tested using digital money to settle large scale transactions between financial institutions, it said on Thursday, but has not decided whether to issue its own digital currency.
The experiment, known as Project Helvetia, was run by the Swiss National Bank (SNB) with Swiss bourse operator SIX and the Bank for International Settlements (BIS).
It looked at using central bank digital currencies (CBDCs) for so-called wholesale transactions between financial institutions to make trading assets on a planned SIX exchange that will specialise in digital versions of conventional assets more efficient.
It also examined connecting an upcoming SIX platform built specifically for digital assets such as cryptocurrencies with Switzerland’s existing wholesale payments system.
The SNB has been sceptical about digital currencies like Facebook’s Diem project, formerly known as Libra, saying they could undermine its ability to conduct monetary policy and achieve its goal of price stability.
SNB governing board member Andrea Maechler said the project showed wholesale CBDCs were feasible from a technical and legal viewpoint, but the outcome did not mean the SNB was committed to issuing one.
“The simple answer is no, we are not ready to issue one,” she told reporters. “The first phase of Project Helvetia has been a success, but … important questions remain.”
Benoit Coeure from BIS said the next stage in the trial is now underway. It is due to be completed by the third quarter of 2021, with cross-border payments also being examined.
Central banks across the world have been ramping up research into their own digital currencies after Facebook last year unveiled plans for Diem, then known as Libra.
Most of the work has been into retail digital currencies, which could be used by individuals to buy products and send money to friends and families, an area not covered in the Swiss project.
The SNB was among seven central banks, including the US Federal Reserve, to lay out in October how a digital currency could look.