Swiss Banks Issue First Digital Bonds Using CHF wCBDC on Regulated DLT Platform

Swiss Banks Issue First Digital Bonds Using CHF wCBDC on Regulated DLT Platform

Switzerland’s SDX and SNB Collaborate on CHF Digital Bond Transactions Using wCBDC

Swiss banks, including the Cantons of Basel-City and Zurich, have recently issued digital bonds using real CHF wholesale central bank digital currency (wCBDC) on SIX Digital Exchange (SDX). This event represents the first instance of such an issuance, utilizing the Swiss National Bank’s (SNB) wCBDC and distributed ledger technology (DLT) in the financial sector.

Project Helvetia Phase III: Exploring New Financial Technologies

Part of Project Helvetia Phase III, initiated by the SNB on Nov. 2, 2023, this project aims to test wCBDC transactions for financial institutions until mid-2024. Basler Kantonalbank and Zürcher Kantonalbank functioned as the issuer agents for the cantons, facilitating the issuance of digital bonds by Basel-City (ISIN: CH1265890678) and Zurich (ISIN: CH1306117073).

David Newns, Head of SIX Digital Exchange, remarked on the significance of these transactions, noting that they represent the first of their kind in a developed economy, utilizing a regulated blockchain-based infrastructure in a production environment.

Regulatory Compliance and Broader Implications

SIX Digital Exchange operates under the license of Switzerland’s financial market regulator, FINMA, and serves as both a stock exchange and a central security depository. This development not only impacts Swiss financial markets but also suggests possible improvements in efficiency and transparency in global financial transactions.

Thomas J. Jordan, Chairman of the Swiss National Bank’s Governing Board, stated, “With this pilot project, we are now, for the first time, making it possible to securely and efficiently settle transactions with tokenized assets on a regulated and productive DLT platform using real wholesale CBDC.”

Distinguishing DLT from Blockchain

The pilot project underlines the use of DLT, differentiating it from blockchain technology. This distinction is important as the Swiss financial sector is exploring various distributed ledger technologies, which include but are not limited to, blockchain. Blockchain is a type of DLT known for its unique data structuring into blocks and sequential chaining, whereas DLT can encompass different structures.

The issuance of these digital bonds via DLT reflects an evolving trend in financial market infrastructure, indicating a shift towards more diverse applications of ledger technology in the industry.

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