By communications from Swiss banks on Friday, the world has just seen its first commercial settlement of a digital-securities transaction, against payment in a real wholesale central bank digital currency (wCBDC), over a regulated DLT-based financial market infrastructure.
The lack of a ready-to-go wholesale CBDC has regularly been pointed out as a bottleneck to the emergence of a delivery-versus-payment settlement process in the fully-digital but fully-regulated domain. This capability, in turn, is what many institutional issuers and investors would demand to see before they trust distributed ledger technology-based platforms with their transactions. Some have mixed the frustration with good hope for an imminent breakthrough (e.g. Goldman Sachs’ Mathew McDermott in this Optic conference panel in October). So, could this Swiss piece of news be the champagne pop?
Six commercial banks were involved as the canton Basel-Stadt pioneered the digital path to borrowing 105 million Swiss francs via a 4-year public bond. The settlement of the first transactions took place on the DLT-powered platform of SIX, within its SIX Digital Exchange entity (SDX) – where the digital-format bonds changed hands against payment in the form of wholesale digital Swiss francs issued by the nation’s central bank, SNB.
The commercial banks were Banque Cantonale Vaudoise, Basler Kantonalbank, Commerzbank, Hypothekarbank Lenzburg, UBS, and Zürcher Kantonalbank. Carriers of Friday’s news include Zürcher Kantonalbank and Swiss National Bank alternate governing board member Thomas Moser on LinkedIn, while more background details can be found for example through SIX’s month-old press release from the announcement of the pilot.