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Swiss National Bank Chairman Thomas Jordan said on Monday that the institution will soon issue a central bank digital currency (CBDC) for wholesale payments on the country’s SIX Digital Exchange.
The experimental Swiss CBDC is designed for use by financial institutions and will be part of a pilot program, he said at the Point Zero Forum in Zurich, Switzerland, according to a report from Reuters.
“This is not just an experiment, it will be real money equivalent to bank reserves,” he said. “The objective is to test real transactions with market participants.”
CBDCs are similar to stablecoins, as they are both digital tokens pegged to the price of a sovereign currency like the dollar or in this case, the Swiss Franc. However, instead of being issued on public networks by private companies, CBDCs are maintained by their respective governments or central banks.
As an increasing number of countries consider launching CBDCs, Switzerland now joins the list of those that have begun piloting the technology, including nations like China, India, and Australia.
A step beyond developing or researching the technology, 18 countries across the globe are currently conducting CBDC pilot programs, according to the Atlantic Council’s Central Bank Digital Currency Tracker.
Instead of being used by the general public for everyday purchases, a wholesale CBDC is typically designed for large transactions between financial institutions, such as transfers between banks. Four countries, including Saudi Arabia, are currently piloting a wholesale CBDC.
Jordan did not rule out the notion of a retail-facing CBDC, but signaled some hesitancy on the part of the Swiss central bank.
“We do not exclude that we will never introduce retail [CBDCs],” he said. “But nevertheless we are a little bit prudent at the moment."
In 2021, an Alternative Member of the SNB’s Governing Board, Thomas Moser, expressed support for a CBDC over a stablecoin denominated in Swiss Francs. A stablecoin introduces counterparty risk where a CBDC does not, he said.
Long before the SIX Digital Exchange launched in 2021, SNB struck a partnership with the SIX Group in 2019 to work on a proof-of-concept for a digital currency.
On Monday, Jordan said the wholesale CBDC pilot program will launch “soon” and run for a limited amount of time.