The central bank of Switzerland intends to issue a wholesale digital currency.
This project will be implemented on six digital exchanges in the country. The relevant statement was made on Monday, June 26, by the chairman of the Swiss National Bank Thomas Jordan. According to him, this project is not an experiment. He also said that in this case, a real currency equivalent to bank reserves will be used.
Thomas Jordan said that the goal of the project is to test real transactions using digital money with market participants. He noted that this intention will be implemented against the background and due to the current situation in the financial sector, within which CBDC release concepts are being developed in many countries. The project of the central bank of Switzerland is limited in terms of time. The implementation of the financial institution’s initiative may be extended later.
Last week, Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva said that at least 10 central banks are currently crossing the finish line in the context of activities to create a national digital currency. At the same time, she noted that there are still many aspects of the CBDC issue that require solutions. In this case, it means organizing the turnover of a new currency and ensuring regulation of the process of its use.
Currently, more than 100 countries are studying the creation of CBDC. Each of the G7 economies has moved from the research stage to the development stage within the framework of this activity, but specific pilot projects have not yet been launched.
The Bank for International Settlements and the working group of central banks claim that digital currency is an innovative opportunity for the monetary system. Also, supporters of this idea believe that the launch of a retail CBDC, unlike a wholesale mechanism, can be based on the role of money issued by the financial regulator as a public good.
At the same time, experts say that the path from the development stage to implementation, at least in pilot mode, requires banks to pay attention to design issues since they relate to technologies, end-user preferences, and business models in the test application space, in which the final decision will not be made.
The issuance and registration of CBDC are sovereign decisions of the authorities. The conclusion in this case will be made based on the results of testing and taking into account the specifics of each jurisdiction.
Alexandre Maymat, head of global transactions and payment services at Société Générale, believes that central banks should create a kind base of impressive arguments in favor of digital currency since existing payment channels fully meet the needs of consumers. He noted that some Europeans use cash not because of the lack of a bank account, but because of living in, according to him, a digital desert. Alexandre Maymat is convinced that the introduction of virtual currency is not the best way to reduce the use of cash, since not all citizens understand digital technologies.
As we have reported earlier, BIS and Bank of England Complete CBDC Project.