National banks in France and Switzerland have announced that they will conduct an experiment using wholesale central bank digital currencies (CBDCs) for cross-border settlement.
The Banque de France and the Swiss National Bank said on Thursday (June 10th) that the experiment “will explore cross-border settlement with two wholesale CBDCs and a French digital financial instrument on a DLT platform”.
Known as the “Jura Project”, the experiment will involve “the exchange of the financial instrument for a wholesale euro via a delivery-to-payment settlement mechanism and the exchange of a wholesale CBDC in euros for a Wholesale CBDC in Swiss francs through a payment-to-payment settlement mechanism. “
Transactions will be settled by banks in France and Switzerland. Both banks stressed that these transactions are “exploratory in nature” and should not be taken as a signal that the Banque de France or the Swiss National Bank are considering issuing wholesale CBDCs. However, both banks have expressed enthusiasm for the experience.
“The Eurosystem is committed to innovation and adapts its actions to the strong trend towards the digitization of payments,” said Sylvia Goulard, Deputy Governor of the Banque de France.
“The Banque de France is convinced of the potential advantages of central bank wholesale digital currency for providing maximum security and efficiency in financial transactions, and last year launched an experimental program to advance in this area. “
And Andréa M. Maechler, a board member of the Swiss National Bank, said her bank had already explored token asset settlement with the wholesale CBDC as part of the Helveti project last year.
The experiment is part of a global movement of central banks exploring the use of digital currency as cryptocurrency becomes more popular and the use of cash continues to decline.
It comes less than a month after Swedish central bank Riksbank announced a collaboration with lender Handelsbanken to test the digital currency e-krona in processing payments on a daily basis.