📰 Table Of Contents
Swiss National Bank’s Exploration of Tokenizing Financial Assets
The chairman of the governing board of the Swiss National Bank (SNB), Thomas Jordan, recently discussed the bank’s interest in exploring innovative ways to tokenize financial assets.
Project Helvetia III and Wholesale CBDC
During an event in Basel, Jordan mentioned that the SNB is looking into alternative options to its wholesale Central Bank Digital Currency (CBDC). The bank is actively involved in Project Helvetia III, which was initiated in December 2023. This project allows participating banks to utilize Swiss franc wholesale CBDC for settling transactions involving tokenized bonds on the SIX Digital Exchange (SDX).
Benefits of Central Bank Money Settlement
Chairman Jordan highlighted the importance of settlement in central bank money, emphasizing its role in eliminating credit and liquidity risks in transactions. This, in turn, contributes to financial stability and reinforces central bank money as the foundation of the monetary system.
Challenges and Alternatives
While discussing the challenges associated with wholesale CBDC, Jordan pointed out governance and fragmentation issues. To address these challenges, the SNB is exploring two alternative settlement approaches:
- Linking the tokenized asset platform with the Swiss Real Time Gross Settlement (RTGS) system.
- Utilizing private token money issued on the tokenized asset platform, backed by sight deposits at the SNB.
Both approaches aim to enhance settlement processes and mitigate risks, but they require thorough evaluation to understand their benefits and potential drawbacks.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
