Business

Admir Aljic

Swiss Bank joins SIX in settling trades using digital franc

The Swiss central bank and a major stock exchange will begin reviewing if and how financial traders would be able to use a central bank digital currency (CBDC) to settle future trades using digital assets. In a statement supplied by a subsidiary of SIX Digital Exchange (SDX), it was explained that the exchange will be partnering with the Swiss National Bank (SNB) and the Bank of International Settlements Innovation Hub Centre to create a proof of concept study to determine if this is actually feasible.

The study will examine if they can develop the first distributed ledger technology (DLT) platform that will be used to issue, trade, settle, and take custody of digital assets. To help establish the proof of concept, SDX will provide its platform to explore to see if there are possibilities for integrating a digital central bank currency into the DLT platform. Already being considered as possibilities would include connecting the existing Swiss Interbank clearing system or to issue a digital Swiss franc.

In a statement issued by the SNB, they explained, “This new form of digital central bank money would be aimed at facilitating the settlement of tokenized assets between financial institutions.”

SIX provided its own statement. This included a quote from Thomas Zeeb, head of securities and exchanges at the firm, where he stated, “Our proof of concept on the subject of digital central bank money for financial market participants on DLT [distributed ledger technology] platforms will not only provide technological insights but will also send an important signal to all market participants to take steps to explore DLT technology and digital assets.”

This appears to be an innovative idea that could catch fire. The SDX expects that distributed ledger-based tokenized assets will lower risks and increase financial innovations. SIX has already established themselves as a financial innovator, especially when it comes to listing numerous crypto-based traded products.

It seems that all of the players involved in this idea are excited about the opportunities it presents. Jos Dijsselhof, the CEO at SIX, added a statement where he explained that “As the operator of the Swiss financial market infrastructure, we welcome the initiative of the SNB and the BIS to conduct more research into innovative financial technologies in Switzerland. We are pleased to contribute to this initiative and, through SIX Digital Exchange, to explore the technological possibilities with which the SNB could support token-based financial ecosystems in the future by providing digital central bank money for financial market participants.”

No timetable has been set as to when this platform is expected to be tested or released.

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