Swiss National Bank (SNB) Chairman Thomas Jordan recently stated that the central bank does not see a need to issue a central bank digital currency (CBDC) for public use, despite acknowledging the benefits of a wholesale version. Jordan argued that the current financial market already offers efficient and innovative payment methods through the private sector, making a retail CBDC unnecessary.
The chairman highlighted the risks associated with retail CBDCs, suggesting that their introduction could disrupt the established monetary system and the relationship between central banks and commercial banks, potentially impacting financial stability. Jordan emphasized that the drawbacks of a retail CBDC outweigh any potential benefits.
This skepticism from the Swiss central bank comes at a time of growing interest in digital currencies and blockchain technology globally. Central banks around the world are exploring the implications of these technologies on traditional banking and monetary policy.
In contrast to their stance on retail CBDCs, the SNB has shown a more favorable attitude towards a wholesale version designed to facilitate transactions between commercial banks using central bank funds. The central bank has initiated a trial, known as Project Helvetia III, to explore the benefits of wholesale CBDC in financial transactions. This pilot project involves major financial institutions such as UBS and Zuercher Kantonal Bank.
Jordan highlighted the efficiency and security benefits of settling transactions with central bank money through Project Helvetia III, suggesting that wholesale CBDC could be used on third-party platforms to settle tokenized assets securely and efficiently. However, he also pointed out that there are several questions that need to be addressed before making a broader decision on implementing wholesale CBDC in Switzerland.
Overall, the SNB’s stance on CBDCs reflects the ongoing debate within the central banking community regarding the potential benefits and risks of introducing digital currencies into the existing financial system. The central bank is considering various scenarios for the use of CBDCs, including settling monetary policy operations with the Swiss franc wholesale CBDC.
This news comes amidst a broader trend of tokenization in the financial industry, with central banks exploring how CBDCs can help settle various tokenized assets. The SNB’s approach to CBDCs could have significant implications for the future of digital currencies and their role in the global economy.
