The national banks of France and Switzerland say they will conduct an experiment using wholesale central bank digital currencies (CBDCs) for cross-border settlement.
The Banque de France and Swiss National Bank said Thursday (June 10) the experiment will “explore cross-border settlement with two wholesale CBDC and a French digital financial instrument on a DLT platform.”
Known as “Project Jura,” the experiment will involve “the exchange of the financial instrument against a euro wholesale through a delivery versus payment settlement mechanism and the exchange of a euro wholesale CBDC against a Swiss franc wholesale CBDC through a payment versus payment settlement mechanism.”
The transactions will be settled by banks in France and Switzerland. The two banks stressed that these transactions are “exploratory in nature” and should not be seen as a signal that either the Banque de France or the Swiss National Bank plan to issue wholesale CBDC. However, both banks expressed enthusiasm for the experiment.
“The Eurosystem is engaging in innovation and adapting its actions to the strong trend towards the digitalisation of payments,” said Sylvia Goulard, Deputy Governor of the Banque de France.
“The Banque de France is convinced of the potential benefits of wholesale central bank digital currency to provide maximum security and efficiency in financial transactions, and opened last year an experimental programme to make progress in this area.”
And Swiss National Bank Governing Board Member Andréa M. Maechler said her bank had already explored the settlement of tokenized assets with wholesale CBDC as a part of Project Helveti last year.
The experiment is part of a global movement by central banks exploring the use of digital currency as cryptocurrency becomes more popular and the use of cash continues to wane.
It comes less than a month after Sweden’s central bank Riksbank announced a collaboration with lender Handelsbanken to test the digital currency e-krona in handling payments in an everyday setting.