The Swiss National Bank believes that retail central bank digital currencies (CBDCs) could have a disruptive effect on the stability of the financial system, while their advantages are likely to be outweighed and that the introduction of such currencies could have "profound consequences" for financial stability.
Swiss National Bank President Thomas Jordan said the central bank “does not see the need” to issue a central bank digital currency (CBDC) for public use, despite the benefits of a wholesale version.
Jordan believes that the current financial market provides a variety of efficient and innovative payment methods through the private sector, so there is no need for a retail CBDC.
Risks of retail CBDC
The central bank chairman said that retail CBDCs could severely disrupt the existing cryptocurrency system and the symbiotic relationship between central banks and commercial banks, leading to widespread and unpredictable effects on the overall financial framework.
Jordan added that the disadvantages of retail CBDCs are likely to outweigh their benefits and that introducing them could have “profound implications” for financial stability.
The SNB’s skepticism comes amid growing global interest in digital currencies and blockchain technology, with central banks exploring their impact on traditional banking and monetary policy.
Jordan also highlighted that the Swiss National Bank upgraded the Swiss Interbank Clearing (SIC) system in November 2023, and the country's most widely used banks will be able to use the system to provide instant payments to retail customers by the summer.
The SIC also lays the foundation for new payment instruments and programmable payments.
Benefits of wholesale CBDC
In contrast to its skepticism about retail CBDCs, the Swiss National Bank has shown a more positive attitude towards wholesale versions aimed at facilitating transactions between commercial banks using central bank funds.
The Swiss National Bank has launched a pilot project called the Helvetia III project to explore the benefits of using wholesale CBDC in financial transactions. The pilot project involves major financial institutions such as UBS and Zurich Cantonal Bank and has successfully completed the settlement of bond issuances in the cantons of Basel City, Zurich, and the cities of Lugano and St. Gallen.
Jordan pointed to the efficiency and security advantages of settling transactions with central bank funds through Project Helvetia III, and said wholesale CBDCs could be issued on third-party platforms to settle tokenized assets securely and efficiently.
However, he also noted that several issues must be resolved before a broader decision is taken on the implementation of a wholesale CBDC in Switzerland, including questions regarding overnight holdings of digital central bank money, its remuneration, and access privileges for financial institutions.
Jordan also placed CBDCs within the broader tokenization trend, suggesting that CBDCs could help solve problems for a variety of tokenized assets. The central bank is considering using a Swiss franc wholesale CBDC to settle monetary policy operations, such as repurchase agreements or Swiss National Bank bills. #瑞士央行 #零售CBDC
