The Swiss central bank could soon test its digital currency

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He Bank for International Settlements (BIS) and the Swiss National Bank (SNB) they could soon try one central bank digital currency (CBDC).

Chinese website ThePaper.cn reports that the director of the BIS Innovation Center has stated that the bank plans to issue a CBDC with the goal of testing it by the end of 2020.

This test will pave the way for several trials on the use of CBDC for retail payments, such as connections to existing payment systems, traceability and regulatory compliance.

The BIS also plans use CBDC for cross-border payments along with other central banks like Hong Kong and Thailand.

The BIS Innovation Center will be tested in Switzerland, Singapore and the Special Administrative Region of Hong Kong in China, in close collaboration with the Swiss National Bank, but is expected to expand to Frankfurt, Paris, London, Stockholm and Toronto.

Already in October 2019, the BIS and the SNB collaborated on the study of a blockchain-based digital currency.

The Swiss central bank and the digital currency

The BIS has already extensively urged countries in the past to thoroughly examine the impact of digital currencies on monetary policy and financial stability. The warnings focus in particular on cross-border transactions, mainly due to the potential risks caused by violent exchange rate fluctuations, “digital dollarization”, the promotion of tax evasion and weakened supervision by national authorities.

This is probably the reason why you decided to start trials.

However, Switzerland has so far seemed quite skeptical about issuing its own digital currency, so much so that, according to the lawyer and tech expert, Lars Schlichting, it is highly unlikely that you will be able to do so by the end of the year.

In other words, although the BIS testing will be carried out in close collaboration with the SNB, it is possible that the SNB will be involved for purely technical purposes, and not with the actual aim of issuing its own CBDC in the near future.

On the other hand, this is just a technical test , since the BIS does not currently handle any currency of its own. However, a BIS CBDC could play a role at the international interbank level, so field testing could begin there.

It's hard to imagine such a CBDC could hit the markets in the future, but it could be the precursor to CBDCs issued by national central banks that already issue their own currency for consumer markets.



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