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The Canton of Zurich issued a CHF 100 million digital bond via the SIX Digital Exchange (SDX) that will settle on December 1, 2023 using a wholesale central bank digital currency (CBDC) issued by the Swiss National Bank (SNB), marking the launch of the SNB's Project Helvetia pilot. The pilot will run to June 2024, and according to the SNB "does not constitute a commitment on its part to introduce wholesale CBDC on a permanent basis. Rather, the SNB aims to test the various models for settling tokenized assets". https://www.snb.ch/en/publications/communication/press-releases/2023/pre_20231102

The BIS, IMF, World Bank, and Swiss National Bank have launched a project aimed at applying tokenization to the paper-based processes used when richer countries donate into some of the World Bank's funds to support poorer parts of the world. The idea is to tokenize the original paper-based "promissory notes" to make it easier to transfer when required. https://www.bis.org/speeches/sp231128.htm

December 1, 2023 saw the world's first commercial settlements of digital securities transactions with real wholesale CBDC on a regulated distributed ledger technology (DLT) based financial market infrastructure (SDX). One was a CHF 105 million franc digital four-year bond issued by the Canton of Basel-Stadt, and the second was a CHF 100 million digital 11-year bond issued by the Canton of Zurich. The wholesale CBDC was issued by the Swiss National Bank as part of Helvetia III. In addition to the settlement on the SDX platform, part of the settlement took place on SIX SIS, the national central securities depository (CSD) of the Swiss financial market and an International Central Securities Depository (ICSD), which runs a node on SDX.

The Swiss National Bank (SNB) and six commercial banks will launch a wholesale central bank digital currency (CBDC) pilot project on December 1, 2023. Project Helvetia Phase III will test the settlement of tokenized bonds against SNB-issued wholesale CBDC on a delivery-versus-payment (DVP) basis on a distributed ledger technology (DLT) based platform run by the SIX Digital Exchange (SDX). The pilot, which will run until June 2024, will use the SNB's Swiss Interbank Clearing (SIC) payment infrastructure for the tokenization of central bank money and that of the SIX SIS central securities depository (CSD) for integration with the traditional bond settlement infrastructure. This follows up on the Phase I and II proof-of-concept (POC) work conducted with the BIS Innovation Hub between 2020 and 2022.

"Financial intermediaries play an important role in consumer adoption and use of payment technology. Card schemes and card-issuing banks set rules for cashless payments between consumers and merchants. We document that these rules have a strong causal impact on the use of digital payment technology. We study an increase in the value limit for contactless cardholder verification ("tap-and-go" limit) that was introduced at the onset of the COVID-19 pandemic. Our analysis is based on anonymized, transaction-level data for a large sample of point-of-sale (POS) debit card payments between 2019 and 2021. We show that the increase in the "tap-and-go" limit caused a significant increase in the consumer use of contactless payments but only a minor increase in first-time adoption of this payment technology. Our results suggest that policy-makers are advised to consider the role of intermediaries and verification rules when evaluating payment innovations, such as instant payment systems or central bank digital currencies (CBDCs)."

The Swiss National Bank clarified the criteria for allowing distributed ledger technology (DLT) trading facilities to access to the Swiss Interbank Clearing (SIC) payment system, to enable atomic securities settlement. This simultaneous exchange of a tokenized asset for cash ideally requires access to the payment system and an account at the central bank. Last year new legislation came into force that created a "DLT trading facility"  license in the Financial Market Infrastructure Act (FinMIA), without which separate licenses would be needed for trading versus custody and settlement. DLT trading facilities that use SIC are expected to have a central bank account or "sight deposit". 

"The Swiss Bankers Association (SBA) has published a white paper on a digital Swiss franc, in which it outlines various designs of "tokenised" deposits on the blockchain. If issued by regulated banks, a deposit token could make an important contribution to Switzerland's future competitiveness and innovative power, as well as bolster its sovereignty."

The Swiss National Bank (SNB) plans to continue with the wholesale central bank digital currency (CBDC) securities settlement experimentation (Project Helvetia) that was concluded in January 2022. That had tested the issuance and settlement of tokenized securities with wholesale CBDC on the SIX Digital Exchange (SDX). In the next phase, the SNB will issue wholesale CBDC on SDX and test selected transactions with market participants. They will also test the use of "synthetic" wholesale CBDC (privately-issued stablecoins backed by SNB deposits) in a similar context. The SNB will also experiment with the processing of tokenized securities in which the payment leg is synchronized via a link to the Swiss Interbank Clearing (SIC) real-time gross settlement (RTGS) system, which also tested in the first phase of Project Helvetia. Such synchronization turned out to be technically possible but clunky compared to integrated processing, since the DLT functionalities had been restricted. As part of the new project, it will be investigated whether these disadvantages can be minimized by making adjustments to the SIC system or to the link itself.

Where the relationship between citizens and the state has a trust deficit to begin with, technology may offer better solutions than institutions. One such idea comes from the world of polling. The election officer (read, the monetary authority) signs a sealed envelope that carries your secret ballot (the payment details); carbon paper (cryptography) carries the signature to the vote inside. So when the envelope is opened (the payee is credited), all that the receiver's bank sees is the signature attached to the ballot, not where the vote (the funds) came from. You, however, will know what you did or didn't intend to do. If a terror financier steals your wallet, you'd go to law enforcement to show them where your tokens are. You might even get them back.

The BIS Innovation Hub, Swiss National Bank and World Bank launched Project Promissa to build a proof of concept (PoC) of a distributed ledger technology (DLT) based platform for digital "tokenized" promissory notes. Many international financial institutions (IFIs) are partly funded promissory notes, most of which are still paper-based. Project Promissa intends to simplify the management of the notes and provide a single source of truth for all counterparties throughout the notes' lifecycles. While the project aims to simplify the management of promissory notes between member nations and IFI, in the future it could be extended to include payments (or encashments) associated with such notes by integrating tokenized payment systems based on private or public money.

Swiss National Bank (SNB) Chair Thomas Jordan provided an update on the central bank's central bank digital currency (CBDC) experiments and thinking. Firstly, the SNB's position remains that there is no need for a Swiss retail CBDC because digital payment requirements are already satisfied, and there are possibly far-reaching consequences for the financial system. However, the SNB continues to advance its wholesale CBDC work aimed at settling tokenized securities on the SIX Digital Exchange (SIX) platform. He also called attention to the unusual approach of issuing the CBDC on a third-party (i.e., SDX) platform. However, as pointed out by Ledger Insights, SIX also operates the Swiss real-time gross settlement (RTGS) system, so a trust relationship already exists. However, the SNB is also evaluating other options for tokenized securities settlement, such as the RTGS "trigger" solutions being tested by the European Central Bank in its wholesale CBDC experiments. https://www.snb.ch/en/publications/communication/speeches/2024/ref_20240408_tjn

The World Bank will issue the first CHF digital bond by an international issuer to settle in Swiss Franc wholesale central bank digital currency (CBDC) provided by the Swiss National Bank (SNB). The coupon and redemption payments on the seven-year CHF 200 million bond will be made using tokenized CHF on the SIX Digital Exchange (SDX). The SDX connects to conventional settlement systems such as Euroclear and Clearstream, via SIX SIS, allowing investors to hold the digital bond through their traditional custodians.

The Swiss National Bank (SNB) will continue its Project Helvetia pilot focusing on tokenized securities settlement on SIX Digital Exchange (SDX) in Swiss franc wholesale central bank digital currency (CBDC) for at least two more years. This will come after the successful completion of Project Helvetia III, which will run until the end of June 2024. This included the SNB becoming the world's first central bank to carry out a monetary policy operation in a live production environment using distributed ledger technology (DLT) when it issued CHF 64 billion in SNB one-week bills on the SDX platform in early June. The next stage of the pilot aims at expanding the scope with the intention to gradually include additional financial institutions and to serve a broader range of financial market transactions. https://www.snb.ch/en/publications/communication/speeches-restricted/pre_20240620_tjnmslanmar