Swiss National Bank Chairman Says Retail CBDC Too Risky

Swiss National Bank (SNB) Chairman Thomas Jordan said Monday (April 8) that the risks of a central bank digital currency (CBDC) issued to the general public would outweigh any potential benefits.

Speaking at an event in Zurich, Jordan said both consumers and businesses have access to a wide range of payment instruments offered by the private sector, and there’s no need for a retail CBDC, Reuters reported Monday.

A wholesale CBDC, on the other hand, could facilitate the safe and efficient settlement of tokenized assets, Jordan said, according to the report.

Still, before deciding whether CBDC for financial institutions should be introduced generally in Switzerland, the central bank must determine whether digital Swiss francs could be held overnight, how it would be remunerated and which financial institutions would have access, Jordan added, per the report.

In a pilot project organized by the SNB last year, the central bank determined that there were benefits to using a wholesale CBDC to settle transactions, the report said. In the pilot, dubbed “Project Helvetia III,” four bond issuances from cantons and cities were successfully settled with wholesale CBDC.

In November 2023, when preparing to pilot a wholesale digital franc in December, Jordan said the SNB, along with six other lenders from Switzerland, Germany and Swiss digital exchange SIX, would issue the CBDC on a blockchain and make it possible to settle transactions with tokenized assets using real wholesale CBDC.

“This is not just an experiment, it will be real money equivalent to bank reserves, and the objective is to test real transactions with market participants,” Jordan said when initially announcing the pilot in June 2023.

In other recent news around CBDCs, Swift said in March that the second phase of industrywide sandbox testing on its CBDC interlinking solution found that Swift’s connector could enable financial institutions to carry out a wide range of transactions using CBDCs and other digital tokens.

Also in March, Hong Kong’s central bank launched a wholesale CBDC project, aiming to support a new financial market infrastructure for the development of the Hong Kong tokenization market, with an initial focus on tokenized deposits.