BIS Innovation Hub to Commence CBDC Test
Posted by Colin Lambert. Last updated: June 10, 2021
The BIS Innovation Hub, the Bank of France and the Swiss National Bank have announced that, together with a private sector consortium led by Accenture, they will conduct an experiment using wholesale central bank digital currencies (wCBDC) for cross-border settlement.
Known as Project Jura, the private sector consortium includes Credit Suisse, Natixis, R3, SIX Digital Exchange and UBS, and the experiment will explore cross-border settlement with two wCBDCs and a French digital financial instrument on a distributed ledger technology (DLT) platform. It will involve the exchange of the financial instrument against a euro wCBDC through a delivery versus payment (DvP) settlement mechanism and the exchange of a euro wCBDC against a Swiss franc wCBDC through a payment versus payment (PvP) settlement mechanism. These transactions will be settled between banks domiciled in France and in Switzerland, respectively.
The project expands on central bank experimentation investigating the effectiveness of wCBDC for cross-border settlement. The BIS stresses it is of “exploratory nature” and “should not be interpreted as an indication that the Bank of France or the Swiss National Bank plan to issue wCBDCs”.
“The G20 has made enhancing cross-border payments a priority and laid out a multi-year roadmap to coordinate efforts,” says Benoît Cœuré, head of the BIS Innovation Hub. “The experiment contributes to this work by exploring how wCBDC could enhance speed, efficiency and transparency in cross-border use cases.”
Sylvie Goulard, deputy governor of the Banque de France, adds, “The Eurosystem is engaging in innovation and adapting its actions to the strong trend towards the digitalisation of payments. The Banque de France is convinced of the potential benefits of wholesale central bank digital currency to provide maximum security and efficiency in financial transactions, and opened last year an experimental programme to make progress in this area.”
Finally, Andréa M Maechler, member of the governing board, Swiss National Bank, says, “It is essential for central banks to stay on top of technological developments. The Swiss National Bank is already investigating the settlement of tokenised assets with wCBDC as part of Project Helvetia. We are looking forward to expanding this analysis to a cross-border context by participating in this exciting initiative.”