Switzerland, renowned for its expertise in financial innovation, is set to revolutionize the future of digital financial markets. A dynamic consortium, comprising leading financial entities, has united to steer this evolution.
An Unprecedented Collaboration
At the heart of this innovation lies a partnership between SIX, the Swiss National Bank (SNB), and a group of six prominent commercial banks. Together, they are embarking on a pioneering pilot named Helvetia Phase III, which aims to introduce tokenized central bank money, or wholesale CBDC, tailored for financial institutions.
Helvetia Phase III: Pioneering Swiss Franc wCBDC
The third phase of the Helvetia project is set to mark history. For the first time, a genuine Swiss Franc wCBDC will be used for settling digital securities transactions. Entrusted with this ambitious task is the SIX Digital Exchange (SDX). Recognized as the globe’s first fully regulated Distributed Ledger Technology (DLT) financial market infrastructure for digital assets, SDX is primed to serve as a reliable hub, hosting this pilot on its robust platform.
The foundation of this pilot is enriched with insights derived from its precursors – Helvetia Phases I and II, a collaborative initiative of BIS Innovation Hub, SNB, and SIX.
The Esteemed Cohort
Helvetia Phase III is backed by a powerful consortium of banks. This includes Banque Cantonale Vaudoise, Basler Kantonalbank, Commerzbank, Hypothekarbank Lenzburg, UBS, and Zürcher Kantonalbank, all of which are esteemed members of SDX. The pilot also leverages the reliable infrastructures of Swiss Interbank Clearing SIC and SIX SIS, the latter being Switzerland’s national Central Securities Depository (CSD) and an International Central Securities Depository (ICSD). Slated to be active between December 2023 and June 2024, the pilot is set to redefine digital finance paradigms.
Objectives and Implications
The heart of Helvetia Phase III lies in its intent to live-test the settlement of both primary and secondary market transactions using wCBDC. The participating banks will harness the power of digital technology to issue Swiss Franc bonds. These will be reconciled against wCBDC, ensuring a delivery-versus-payment mechanism. The reach of Helvetia Phase III extends further to cover repo transactions. These transactions, initiated on the CO:RE trading platform of SIX Repo and managed by the Triparty Agent of SIX SIS, will be anchored by digital bonds eligible for SNB repo transactions, and will see settlement on SDX in wCBDC.
David Newns, the visionary Head of SDX, extolled the transformative potential of DLT in the realm of digital assets. He said, “Switzerland stands tall as a trailblazer in this tech evolution, with stalwarts like SIX, especially SDX, in synergy with SNB, leading the charge. This transformative pilot heralds the dawn of a new digital finance epoch and is set to reshape the contours of the global financial landscape.”
