Switzerland piloting CBDC

The chairman of the Swiss National Bank (SNB), Thomas Jordan, says the bank will "soon" start a pilot project to test a wholesale central bank digital currency (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," said Jordan. He did not rule out the possibility of a retail CBDC but said the bank was being a little "prudent" for now.

A wholesale CBDC is not designed for nor intended to be used by the general public. The SNB's approach differs from that of the UK and the European Union, both of which are studying a retail CBDC option. A wholesale CBDC is designed to be used by financial institutions for interbank transactions. The SNB has been operating what it calls 'Project Helvetia', which has been conducting a proof of concept for a wholesale CBDC.

Interest in CBDCs has grown fast. Two years ago just 35 countries were considering a CBDC. By today 11 countries are operating a CBDC and 114 others, collectively representing 95% of global gross domestic product (GDP) were exploring the concept. China, which has spearheaded the CBDC movement, plans to extend its own CBDC to the whole country this year. The financial sanctions on Russia have helped accelerate moves towards CBDCs; there are now 9 cross-border wholesale CBDC tests and 7 cross-border retail projects, nearly double that of 2021.

Proponents of CBDCs argue that they would make payments faster and less expensive, and would widen financial inclusion. Opponents argue that CBDCs would eliminate the anonymity given by cash, threaten financial privacy.