Global Impact Award: Swiss National Bank

The Swiss National Bank (SNB) is recognised for its pioneering live wholesale central bank digital currency (CBDC) and monetary policy operations on distributed ledger technology

Experiments advancing global financial market infrastructure, and decentralised monetary and financial systems, are at a critical juncture. They are beginning to shift to an important next stage in the digital evolution, from proof of concept towards live production. The SNB is pioneering in this regard.

In June 2024, the SNB became the world’s first central bank to carry out a monetary policy operation using distributed ledger technology (DLT). It also completed Phase III of Project Helvetia – its multiphase investigation on the settlement of tokenised assets using central bank money, which ran from December 2023.

Thomas Moser, alternate member of the SNB’s governing board, tells Central Banking the monetary policy operation was “really exciting”. There was, however, trepidation within the SNB about going live with the new technology.

“There is always a risk of failure,” says Moser. “We had discussions about whether we wanted to do the monetary policy transaction in a test environment or a production environment.” Despite reservations among some officials, the SNB issued real bonds in the market. “When you do something in a production environment, you learn much, much more because it requires more careful thinking and planning.”

The issuance of token-based SNB bills worth Sfr64 million ($72 million) on SIX Digital Exchange (SDX), with a one-week term for liquidity absorption, was a success. “These are huge steps for the central banking community,” says Moser. SDX is a stock exchange and central securities depository run on DLT by the same group that runs the Swiss Exchange and Bolsas y Mercados Españoles, the latter of which operates all of Spain’s stock markets and financial systems.

To date, of all the digital bonds issued on SDX, worth approximately Sfr1.4 billion, the total settled in wholesale CBDCs is valued at around Sfr750 million. The central bank announced in June that it will continue experimenting with wholesale CBDCs and SDX for at least two years. 

“There is a lot of interest in other use cases, like swaps and repos, and we are looking into this with interested banks,” reveals Moser. “So far, we have provided [the] wholesale CBDC on an intraday level. Going towards overnight will require additional IT investment – both on our side and the bank side.” The shift to an overnight wholesale CBDC will also require “some conceptual thinking”, says Moser. “How do you account for [an] overnight wholesale CBDC? How do you pay interest?” These are some of the new questions arising from the SNB’s work that are important for the central banking community exploring CBDCs to understand. Other imminent exploratory work “would be to use smart contracts in an intelligent way”.

“That’s the goal for the next two years – increasing scope, type of transaction and moving from [an] intraday wholesale CBDC to an overnight wholesale CBDC,” says Moser, on the continuing successful public/private partnership between the SNB and SDX.

In two years’ time, the SNB “will then make an evaluation and decide whether to continue for another two years or whether to conclude that wholesale CBDCs, at least in this form, do not have a promising future”, adds Moser.