Along with related topics such as tokenisation and blockchain, central bank digital currencies (CBDCs) are having a moment in the spotlight. In an interview published on SIX Digital Exchange (SDX), Mathias Studach, the firm’s head of finance, risk, and organisational development shares insights on the progress of implementing CBDCs in Switzerland and the potential it holds.

Citing numbers from the Bank for International Settlements (BIS), which claim that 90 percent of central banks worldwide are currently studying or piloting CBDCs, Mathias Studach envisions “a future where CBDCs play a pivotal role in the financial industry, coexisting with stablecoins and other cryptocurrencies”. In advanced economies, such as Switzerland’s, wholesale CBDCs (wCBDCs) are in focus, while in emerging economies, where financial inclusion is a goal, retail CBDCs (rCBDCs) are likely to be more prevalent.

Taking steps forward

On its part, SIX Group has worked with Swiss National Bank (SNB), BIS Innovation Hub, and “selected market participants” to pilot experiments in the issuance and settlement of digital assets in wCBDCs on the SDX Digital Asset platform. The next steps are to test ”the issuance of real wCBDC on SDX for a limited time” as well as ”selected transactions with market participants”.

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Mathias Studach believes that “wCBDC has the potential to be a catalyst for the adoption of digital assets and will significantly advance blockchain-based innovations within the financial industry”. He points out that existing payment and settlement tokens, such as stablecoins, “come with notable drawbacks, primarily related to counterparty risks associated with the issuer of these stablecoins”. “The most effective way to address the counterparty risk is by settling securities transactions in central bank money, in the form of a wCBDC,” he says.