Blockchain concept over city background

Switzerland’s central bank has carried out a successful test of a centrally-issued digital currency.

The Bank for International Settlements’ Innovation Hub joined the Swiss National Bank (SNB) and infrastructure firm, SIX, in an experiment that integrates tokenized digital assets and central bank money.

The firms said that the test, known as Project Helvetia, examined both the technical and legal feasibility of transferring digital assets by issuing a wholesale central bank digital currency (CBDC) on a blockchain platform, and linking that platform to the existing wholesale payment system.

“The initiative demonstrated the feasibility and legal robustness of both alternatives in a near-live setup,” they said.

Looking ahead, the firms said that more work is needed to better understand “the practical complexities and policy implications of wholesale CBDC.”

“Different design choices that allow for trade-offs between risks and benefits need to be explored,” they said.

“Irrespective of which technologies the financial markets adopt next, the safety and reliability of Swiss financial infrastructure must be preserved. If [distributed ledger technology] can deliver significant improvements in securities trading and settlement, then the SNB will be prepared,” said Andréa Maechler, member of the Swiss central bank’s governing board.

“The collaboration sets the stage for further joint experimentation to assess the impact of digital innovation on the future of the financial system,” the firms said.