At a conference in Zurich on Monday, the chairman of the Swiss National Bank (SNB) announced that the bank plans to issue a wholesale central bank digital currency (CBDC) on Switzerland’s SIX digital exchange as part of a pilot project.
A wholesale CBDC is one designed for financial institutions to make use of for interbank transactions. On the other hand, a retail CBDC is for the general public to use.
A “Real Money Equivalent,” Says SNB Chief
“This is not just an experiment, it will be real money equivalent to bank reserves and the objective is to test real transactions with market participants,” Reuters quoted the bank’s chairman, Thomas Jordan, stating at the Point Zero Forum.
However, the central banker did not rule out canning the project at some point in the future. “We do not exclude that we will never introduce retail [CBDCs] but nevertheless we are a little bit prudent at the moment,” he said.
In a fast-changing financial landscape, Switzerland has gone its own way. The country is neither in the EU, nor does it use the bloc’s currency, the Euro. Instead, Switzerland has its own currency, the Swiss Franc.
The alpine nation has been considering its digital currency for some time. In January 2021, the country patented such terms as “e-franc” and “digital Swiss franc.” However, the country’s financial elite has known it wanted a wholesale-only option since 2020.
Switzerland Has Chosen the Wholesale CBDC Route
The nation’s choice to pursue the path of a wholesale CBDC stands in contrast to its European neighbors in the UK and the EU, which have both worked on a retail option. Although, the choice is in line with Switzerland’s image as a hub for financial services.
However, the share of GDP accounted for by financial and insurance services is on a long-term decline. The sector took a 9% share last year, down from 10% in 2011.
Earlier this year, the European Central Bank (ECB) backpedaled on plans to make its digital euro programmable.
In a prank interview with a pretend Ukrainian President Volodymyr Zelenskyy, the head of the European Central Bank, Christine Lagarde, said there would be a “limited amount of control” on how it could be spent.
However, a spokesperson for the ECB later told BeInCrypto that any CBDC would not be programmable money.
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