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The notion of central bank digital currency (CBDC) is witnessing its expansion worldwide. In one way or another, central banks of many countries are looking at the opportunities to take leverage and bring the economy towards digitization. Recently, Switzerland’s central bank is reportedly preparing to start a pilot project for wholesale central bank digital currency (CBDC).
Reuters reported the Swiss National Bank’s (SNB) chair, Thomas Jordan, announced the upcoming launch of the wholesale CBDC pilot project. The project will be based on SIX Digital Exchange.
Jordan had spoken at the Point Zero Forum conference in Zurich on Monday, June 26. Though there was no tentative timeline for the launch, the SNB chair assured it will be starting “soon.”
“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,” he said.
Given the increasing participation of private players in the digital currency space, financial institutions across the world are also heading towards it in the effort to not stay behind.
Retail CBDC Has to Wait Longer
Reuters reported SNB has concerns around the retail CBDCs usage. In contrast, it is moving ahead with wholesale CBDCs.
The SNB chair cited the potential risks with the retail CBDCs as the reason behind keeping them out of the financial system. He thinks they become difficult to control while using.
Jordan clarified retail CBDCs are not meant to be completely ignored, but they are taking careful measures before going all in with it.
“We do not exclude that we will never introduce retail [CBDCs] but nevertheless we are a little bit prudent at the moment,” he said.
Central bank digital currencies are assets regulated by the central bank or financial regulator in a country. The currency would be using blockchain technology for operations and would leverage the benefits of underlying technology. From faster and cheaper transactions and ease on cross-border transactions, CBDC brings advantages over the regular fiat currencies.
Cryptocurrencies inherently facilitate the features to transfer the value anywhere in the world in relatively less time and transaction fees. However, volatility and regional regulations hinders the crypto payments to go mainstream at larger extent.
Stablecoins, the crypto assets with pegged and stable value with a fiat currency, act as an alternative to beat the inherent flaws of crypto and advantages over fiat currencies. Central banks across the world seeking the demand of digital currencies are keen to develop their own CBDC and digital currency infrastructure.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
