Switzerland, a global leader in financial innovation, is taking a significant leap forward with the collaborative efforts of financial markets participants to develop the digital financial markets of the future.
SIX, the Swiss National Bank (SNB) and six commercial banks, will collaborate on a ground-breaking pilot focused on tokenized central bank money for financial institutions (referred to as wholesale central bank digital currency or wCBDC).
This pilot, Helvetia Phase III, will, for the first time, see the orchestration of a real Swiss Franc wCBDC settling digital securities transactions. SIX Digital Exchange (SDX), the world’s pioneering fully regulated Distributed Ledger Technology (DLT)-based financial market infrastructure (FMI) for digital assets, will act as trusted gateway and will host the pilot on its digital asset platform. The pilot builds on the findings of earlier Helvetia phases by the BIS Innovation Hub, the Swiss National Bank (SNB) and the financial infrastructure operator SIX (Helvetia Phase I and II).
The collaboration will involve Banque Cantonale Vaudoise, Basler Kantonalbank, Commerzbank, Hypothekarbank Lenzburg, UBS, and Zürcher Kantonalbank as existing SDX member banks. In addition to the SDX platform, the pilot uses the infrastructure of Swiss Interbank Clearing SIC, which is operated by SIX and SIX SIS, the national Central Securities Depository (CSD) of the Swiss financial market and an International Central Securities Depository (ICSD). The pilot will run from December 2023 to June 2024.
The objective of the pilot is to test, in a live production environment, the settlement of primary and secondary market transactions in wCBDC. Participating banks will be able to issue digital Swiss Franc bonds, which will be settled against wCBDC on a delivery-versus-payment basis. Project Helvetia Phase III will also extend to the settlement of repo transactions, which are initiated on the CO:RE trading platform of SIX Repo and administered by the Triparty Agent of SIX SIS. These transactions, which are conducted in test environments, will be collateralized by digital bonds eligible for SNB repo transactions and settled on SDX in wCBDC.
“Switzerland is at the forefront of digital financial innovation. This collaboration between SIX, the Swiss National Bank, and six commercial banks on the pilot operation for tokenized central bank money is a pioneering leap. It’s a testament to our commitment to the future of digital finance and underscores the transformative power of DLT in the financial system.”Jos Dijsselhof, CEO SIX
The collaboration underscores the role of DLT as a catalyst for digital asset adoption, showcasing increased transparency and efficiency in the regulated financial system.
“Switzerland has taken a leading role in this technological evolution, led by a broad array of financial market participants, including SIX, SDX specifically and our members and in collaboration with the SNB. This ground-breaking initiative is poised to open a new era of digital finance and shape the trajectory of the global financial industry.”David Newns, Head SDX
SIX Digital Exchange AG (SDX) is the first fully regulated financial market infrastructure (FMI) for the issuance, trading, settlement, and custody of digital assets. SDX is licensed by Switzerland’s financial market regulator, FINMA, to operate as a stock exchange (via SDX Trading AG) and central security depository (CSD) on distributed ledger technology (DLT). As part of the SIX Group, SDX is subject to the Group’s high quality and security standards covered under Swiss law.