SNB Gears Up to Launch a Pilot Program for Wholesale CBDC

The Swiss central bank, known as the Swiss National Bank (SNB), is gearing up to conduct a pilot for a Central Bank Digital Currency (CBDC).

SNB Chairman Thomas Jordan made the announcement on Monday at the Point Zero Forum in Zurich, noting that the upcoming CBDC pilot would take place on Switzerland’s SIX digital exchange. He added  that the pilot program would commence “soon” and would be conducted for a limited duration..

Pilot Plans to Conduct Real CBDC Transactions

Chairman Jordan emphasized that this initiative is not merely an experiment but a significant step towards establishing a digital currency equivalent to traditional bank reserves.

By partnering with market participants, the SNB aims to conduct real transactions using this wholesale CBDC, thereby testing its viability and functionality within the existing financial ecosystem. Additionally Chairman Jordan revealed that the pilot will be on interbank, wholesale usage, emphasizing transactions between financial institutions rather than the general public. 

As such, the pilot will not include a public, retail version of the CBDC. Chairman Jordan explained that while the SNB does not completely rule out the introduction of retail CBDCs in the future, caution is currently exercised, and the focus remains on wholesale CBDC implementation.

This approach allows the central bank to thoroughly evaluate the impact of CBDCs on the financial industry and refine their understanding of the technology before considering a broader retail rollout. 

CBDCs Offers Solution for Cash Shortage

The declining use of cash and the rising popularity of digital payment methods have prompted central banks to examine the potential benefits and challenges of introducing their own digital currencies. 

By exploring CBDCs, these financial institutions aim to maintain control over the monetary system while adapting to evolving consumer preferences and technological advancements.

Government Oppositions to CBDC

While countries like China have taken a leading role in CBDC development, with other nations such as Japan, Brazil, and Australia following suit, the United States and some nations have shown less enthusiasm for a digital currency.

For instance, Texas recently introduced a bill against a national digital currency, explaining that the national stablecoin is a “digital form of money that is a liability of the Federal Reserve, rather than a liability of commercial banks.”

Similarly, the government of Key recently revealed that it is not interested in launching a CBDC in the short to medium term.