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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

Bangko Sentral ng Pilipinas (BSP) will reportedly complete its wholesale central bank digital currency (CBDC) pilot that launched in September 2023, by the end of 2024. The BSP is testing out basic funds transfers between six participating banks, with plans to later test are higher value-adding services like securities settlement.

The Governor of Bangko Sentral ng Pilipinas (BSP) reportedly expects to put in place within the next two years a wholesale central bank digital currency (CBDC). However, blockchain or distributed ledger technology (DLT) won't be used, which brings into question whether it is a "wholesale CBDC". Market convention defines a retail CBDC as being technology agnostic (it can be DLT-based or not), but it defines wholesale CBDC as being DLT-based. Otherwise, every non-DLT central bank-run digital payment system (e.g., real-time gross settlement systems) would be on the list of wholesale CBDC projects.

The Eurosystem successfully completed its first experiment in settling wholesale transactions tokenized on a distributed ledger technology (DLT) platform in central bank money. Oesterreichische Nationalbank tokenized and simulated delivery-versus-payment settlement of government bonds in a secondary market transaction.

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 Bank for International Settlements (BIS) Innovation Hub and Bank of England have launched Project Meridian FX to experiment with FX transaction synchronization concepts. This will be achieved via a "synchronization operator" (SO) that uses distributed ledger technology (DLT) to interlink central bank settlement (RTGS) systems, and orchestrate the settlement of a payment versus payment (PvP) FX transactions. The experiments, which will take place towards the end of 2024, will connect Meridian FX's SO to the three solutions being explored as part of the Eurosystem's broader exploratory work on wholesale settlement.

Fnality and HQLAᵡ have completed end-to-end testing to enable intraday sterling repo settlement on the Eurex Repo F7 platform via their two blockchain networks. They plan to go live in Q4 2024 subject to UK regulatory approvals. Fnality is a UK-regulated systemic payment system and HQLAᵡ operates a digital collateral registry to enable intraday collateral movement. Fnality's settlement instrument is effectively a "synthetic" wholesale central bank digital currency (CBDC) - i..e., a sterling-denominated stablecoin backed by deposits in a Bank of England omnibus account. In conventional repo transactions, the collateral settlement takes two days, but on the Fnality/HQLAᵡ platform, trades can be settled on a atomically intra-day delivery-versus-payment (DvP) basis. https://www.linkedin.com/posts/eurex_eurex-repo-dlt-activity-7208755407740137472-g29d/

The European Central Bank (ECB) gave its approval for an additional group of participants to test distributed ledger technology (DLT) for the settlement of wholesale transactions in central bank money. In total, 48 private firms from the financial sector and three central banks will take part in the second wave of the Eurosystem's exploratory work. From July to November 2024, the group will explore specific use cases, joining a first group of participants who have already been testing since May 13. This second wave will broaden the scope of the exploratory work and will cover (i) domestic payments within the euro area with mock settlement, (ii) a wide set of securities-related use cases with both real and mock settlement, and (iii) foreign exchange payment-versus-payment (PvP) transactions with other central banks with mock settlement. Meanwhile, nine participants from the first group will add further use cases and interoperability-type solutions. https://www.ecb.europa.eu/press/intro/news/html/ecb.mipnews240621.en.html

The Bank for International Settlements (BIS) Project mBridge is accepting value added products and new use cases as it reaches minimum viable product stage (MVP). The project aims to explore multi-central bank digital currency (CBDC) platform shared among participating central banks and commercial banks, built on distributed ledger technology (DLT) to enable instant cross-border payments and settlement. The project was launched in 2021 by the BIS Innovation Hub, in collaboration with the Bank of Thailand, the Central Bank of the United Arab Emirates, the People's Bank of China and the Hong Kong Monetary Authority. The Saudi Central Bank is now joining mBridge as a full participant. There are also now more than 26 observing members.

"As part of the Saudi Central Bank's (SAMA) pursuit to build a robust and innovative cross-border payments infrastructure in collaboration with various international financial institutions and central banks, SAMA has joined the Bank for International Settlements' (BIS) mBridge project as a participant in the Minimum Viable Product (MVP) platform."

The Banque de France (BdF) and Banque centrale du Luxembourg have published the results of Project Venus, a successful 2022 experiment demonstrating the use of distributed ledger technologies (DLTs) in digital bond issuance and settlement. On 29 November 2022, the European Investment Bank (EIB) successfully issued a euro‑denominated digital bond on a private blockchain using wholesale central bank digital currency (CBDC) for settlement. Goldman Sachs Bank Europe, Santander and Société Générale facilitated the subscription and distribution processes. While project Venus was considered a success, further experimentation and policy work will be required before the decision is made to issue issue a wholesale CBDC. Meanwhile, the Eurosystem is conducting additional experiments and trials, with conclusions expected by mid-2025.

The Boerse Stuttgart Group (BSG) will be part of the second wave of the European Central Bank (ECB) European Union-wide wholesale DLT trials for central bank money settlement. Commerzbank, Deutsche Bank, DZ Bank, LBBW, Bankhaus Metzler and V-Bank, who are directly connected to the Bourse's new blockchain-based settlement solution, will act as trading and settlement participants to test the settlement of exchange transactions with tokenized securities against central bank money. The Deutsche Bundesbank is providing its trigger solution, which connects blockchain transactions with the traditional euro payment system, for the test.

Banco de España has launched a second wholesale central bank digital currency (CBDC) trial, this time to test the settlement of natively digital bond transactions, and make coupon and redemption payments. The first trial, announced in January, included developing a tokenized deposit solution for interbank payments, and settling tokenized securities (i.e., not natively digital) transactions. https://boe.gob.es/boe/dias/2024/05/06/pdfs/BOE-A-2024-9112.pdf

The Qatar Central Bank (QCB) has completed the development of the infrastructure for its wholesale central bank digital currency (CBDC) project. In the next phase which will extend to October 2024, the central bank will test and develop selected applications of distributed ledger technology (DLT) based wholesale CBDC to settle large payments with a group of local and international banks in a trial environment. The project will focus on applications that increase access to capital markets for operating banks in the country, enhance domestic settlement, and improve the efficiency of securities transactions.

The Italian Banking Association (ABI) published the results of its Project Leonidas (Liquidation Effective ONchaIn Dlt Asset on Check) distributed ledger technology (DLT) based wholesale central bank digital currency (CBDC) proof of concept (POC) work. The project, which concluded at the end of 2023, was carried out under the Banca d'Italia Milano Hub innovation center. It investigated the benefits of using DLT-based wholesale CBDC for interbank transactions, so that the capacity, efficiency and robustness requirements of central bank systems are met.

According to the latest Reserve Bank of India (RBI) data, there was just 800,000 rupees (less than $10,000) wholesale central bank digital currency (CBDC) outstanding at end-March 2024. The RBI has been piloting wholesale CBDC since November 2022, including for settling government bond secondary market transactions, and interbank lending in call money markets. However, the small numbers could be attributable to banks converting CBDC to central bank reserves to earn interest, or the central bank may be automatically converting them at the end of the day, which is what the Swiss National Bank (SNB) did in the earlier phases of its Project Helvetia experiments. The digital rupee retail CBDC isn't catching fire either, with only 2.34 billion rupees ($28 million) outstanding at end-March 2024, versus 34,778.05 billion rupees of banknotes in circulation. https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx?year=2024

The President of the Central Bank of the Republic of China (CBRC), Yang Chin-long, said that developing a central bank digital currency (CBDC) is not a competition and that the central bank is focused on steady progress over speed. Yang said the central bank is conducting experiments in three scenarios to enhance domestic payment efficiency and innovation, retail and wholesale CBDC and the application of tokenization technology to digitally transform wholesale CBDC and commercial bank currency, supporting various asset tokens. The CBRC is also conducting proofs-of-concept and collaborating with participating banks to build a common platform for tokenization. https://www.cbc.gov.tw/tw/cp-302-170834-8653d-1.html

Visa published a report on its tokenized deposit trial with HSBC and Hang Seng Bank, which involved (i) settling high value real estate transaction and (ii) settling Visa card payments. In Hong Kong there are restrictions on faster payment amounts, so the real estate transaction supported a high value instant payment with tokenized deposits. With tokenized deposits, when a payee transfers money to a recipient, the sending bank burns the tokens and the recipient bank mints them so they appear in the recipient's wallet. Instant settlement is facilitated by wholesale CBDC, with the token and CBDC exchanges happening simultaneously, so there's no settlement risk. https://usa.visa.com/content/dam/VCOM/regional/na/us/Solutions/documents/e-hkd-and-the-future-of-global-money-movement.pdf?linkId=492498536

"Wholesale CBDCs were considered useful for banks. However, some institutions are keener than others, often depending on the application of the wholesale CBDC. Executives in the securities services sector are usually the most enthusiastic. On the payments side, JP Morgan's Umar Farooq appeared to have reservations during last month's Consensus event... However, at a big picture level, the objective of wholesale CBDC is to reduce risk. Instant settlement in central bank money for a wider range of applications could take a significant amount of risk out of the banking and capital markets system. If banks are subject to less risk, it might allow them to be more expansive in other areas.

"This article discusses the rationale for the Eurosystem exploring central bank money settlement of transactions registered on DLT platforms, the results of its analysis so far and the envisaged next steps. Section 2 provides background on the role of central bank money in the settlement of wholesale financial transactions. Section 3 discusses market developments regarding the use of new technologies, such as DLT, for wholesale financial transactions. Section 4 discusses the implications of a potential market uptake of DLT for the Eurosystem's wholesale central bank money settlement infrastructures. Section 5 outlines the Eurosystem's plans to further explore how wholesale financial transactions recorded on DLT platforms could be settled in central bank money."