Although the Swiss Central Bank didn’t settle on the way forward in issuing its central bank digital currency (CBDC), the test phase has been successful. The digital franc trial involved the settlement of large-scaled transactions among financial entities via a test called Project Helvetia.
Amping up the quality of trade
Project Helvetia was managed by the Bank for International Settlement (BIS), the Swiss National Bank (SNB), and the Swiss bourse operator SIX. The Swiss Central Bank looked at utilizing CBDCs for the wholesale transfers among financial institutions to make trading assets more efficient on an organized SIX exchange that specializes in digital styles of traditional assets.
The SNB has expressed its skepticism about digital currencies such as Facebook’s Libra, which is now called Diem because they could threaten its ability to implement monetary policy in order to achieve its goal of price strength.
Andrea Maechler, board member of the SNB, said that the venture displayed the fact that wholesale central bank digital currencies were attainable from a technical and regulatory perspective, but the result didn’t mean the SNB was adamant about issuing one.
The IMF has discussed this problem and told CB’s not to lower their guard while working on CBDCs since they need to bring in strong regulatory structures to allow them to operate.
The following phase of the trial is planned for Q3 of 2020
Cross-border payments will be part of the next stage of the trial scheduled for Q3 of next year. Central banks worldwide are accelerating central bank digital currency research since they view them as pioneering ways for simplifying domestic and foreign payments, provided that transactions would be done through the internet and probably offline.
Just recently, Olaf Scholz, German Finance Minister, stated that the digital euro was the perfect financial instrument required to step into the blank space made by the heightened demand for virtual money from European enterprises and users. Scholz asked the competent entities with authority to funnel more quickly the introduction of Europe’s CB’s virtual currency.