Swiss National Bank (SNB), the central bank of Switzerland, has teamed up with the also-Swiss Bank for International Settlements (BIS) and SIX Group to create a new type of ‘digital central bank money’.
News of the token was first broken in a press release issued by SNB on October 8, where the bank detailed how its partnership with BIS entails the establishment of a new ‘BIS Innovation Hub’.
BIS Innovation HUB will be the location of the research and development that will take place for the new token-based technology, as well as various other projects.
It will initially comprise of centres located across Switzerland, Hong Kong and Singapore.
“We are very proud that one of the first three Hub Centres will be here in Switzerland, where the BIS has been based for nearly 90 years.”
Agustín Carstens (BIS, General Manager)
SNB, in its press release, states that the proposed digital currency will be informed through an investigation into the “integration of central bank money into a distributed ledger technology infrastructure” so as to support settlements of tokenized assets between financial institutions.
It subsequently details its second announced research project, which seeks to resolve a perceived rise in the demands of central banks pertaining to the tracking and monitoring of “fast-paced electronic markets”.
Whilst not directly related to digital assets, blockchain has proven a robust technology when it comes to immutable storage and accessibility of transaction data.
“ SIX is working with the SNB to explore technological options to make digital central bank money available for the trading and settlement of tokenized assets between financial market participants…
to explore technical possibilities for integrating digital central bank money into DLT platforms.”
SIX Group (Press Release)
SIX Group issued its own press release later in the same day, reiterating some of the information previously established whilst expanding on others, describes the potential new token as a “proof of concept”.
The company also states that the project will be built upon the technology behind the SIX Digital Exchange (SDX) “to explore tech possibilities of integrating digital central bank money into DLT platforms”.
SIX presents the project as having two distinct possible directions:
- Connection of the existing Swiss Interbank Clearing System.
- Issuance of digital Swiss franc tokens by the SNB for financial market participants on the SDX system.
“The SNB has for some time been closely following the digitalisation of the financial sector and technological innovations in the areas covered by its mandate.
Through the cooperation at the BIS Innovation Hub Centre in Switzerland, the SNB will be able to further expand its expertise in the area of financial markets and their infrastructures.”
Thomas J. Jordan (SNB, Chairman of the Governing Board)
The Government of Switzerland has been fairly relaxed when it comes to the regulation and acceptance of cryptocurrencies, and as such the country has seen strong growth from blockchain and cryptocurrency inspired projects. From industry in general, but particularly from banks.
This laid back approach has also been reflected in the actions of Swiss lawmakers which have, so far, been progressive with regards to laying the foundations of a regulatory framework.
Our proof of concept on the subject of digital central bank money for financial market participants on DLT platforms will not only provide technological insights, but will also send an important signal to all market participants to take steps to explore DLT technology and digital assets.”
Thomas Zeeb (SIX, Head Securities & Exchanges)
 has teamed up with International Settlements (BIS) and SIX Group to create a 'digital central bank money' on new DLT.){kind=link}