Successful Digital Currency Trial Run by Central Banks of France and Switzerland08 December 2021
The Bank of France and the Swiss National Bank successfully conducted a trial of foreign exchange rate transactions with digital currencies.
A Successful Trial
The Bank of France and the Swiss National Bank have informed that they conducted a trial of foreign exchagne rate transactions with a use of digital currencies. The experiment is said to provide both institution “tremendous” insight into the novel technology. The BoF and the SNB are working together on Europe’s first cross-border digital payments. The innovative, fintech project is called Jura, named after the mountain range located on the border of the two countries. In the Project, apart from both central banks, there are also involved Bank for International Settlements, UBS Group AG, Credit Suisse, Natixis SA and other investors. The idea behind the fintech, digital initiative is to take a closer look at potential issuing, transferring and redeeming tokenized French commercial paper valued at 200,000 euros (around 226,090 dollars as per latest, average exchange rate) between Swiss and French financial institutions. The conducted trial was the first time ever a digital Swiss franc and digital euro were fully tested. The result showed that it was possible to settle transactions in foreign exchange rate between euro and Swiss franc wholesale CBDCs. It also confirmed that there is an option to issue, redeem and transfer tokenized euro-denominated French commercial paper between Swiss and French financial institutions.
Lot of Work Ahead
Although the trial was successful, banks said it would not lead immediately to issuance of CBDCs. "Project Jura confirms that a well-designed wholesale CBDC can play a critical role as a safe and neutral settlement asset for international financial transactions," said Benoît Coeuré, head of the Innovation Hub at the Bank for International Settlements. While Sylvie Goulard, deputy governor of the Bank of France, added that: “We are glad that it worked, but we still have a lot to do. We wanted to transfer money from one country to another and the other way around, and we achieve this.” SNB Governing Board Member Andrea Maechler claims there are some matters that still need to be investigated, like how scalable the technological platform can be, while adding: “We are still at the beginning.” “The SNB has no plans to issue a CBDC of any sort” – Maechler also declared.
Digital Money Around the World
CBDC trials conducted by France and Switzerland is just the latest of tests run by central banks on crypto assets. Monetary authorities around the globe have been studying how the growing popularity of digital money can influence the traditional financial system. The People’s Bank of China might soon become the first major central bank to issue a digital version of its currency, pegged to the exchange rate of the traditional one. The idea is to keep up with and to seize control of a quickly digitizing economy of China.