The Bank of France, the Swiss National Bank (SNB), and the Bank for International Settlements (BIS) have successfully tested the application of a wholesale central bank digital currency in cross-border payments.
The experiment, which was carried out by the monetary authorities of France, Switzerland, and the BIS, revealed that central bank digital currencies (CBDCs) can be used effectively for international settlements between financial institutions.
Jura, such the name of the trial, focused on the settlement of currency transactions in euros and Swiss francs through wholesale CBDCs, as well as the issuance, transfer and repayment of a French commercial paper denominated in euros between French financial institutions and Swiss, the banks explained.
The recently completed trial used distributed ledger technology and was conducted with the help of private companies Accenture, Credit Suisse, Natixis, R3, SIX Digital Exchange, and UBS. The test consisted of direct transfer of wholesale CBDCs in euros and Swiss francs between commercial banks in France and Switzerland on a single third-party operated distributed ledger platform with real value transactions.
According to the partners, the wholesale CBDC issuance providing regulated non-resident financial institutions with direct access to central bank money raises certain policy questions. To solve them, they took a new approach, employing subnets and double notary signature, which is expected to give central banks confidence to issue wholesale CBDCs on third-party platforms.
Benoît Cœuré, who heads the BIS Innovation Center, said that “the Jura project confirms that a well-designed wholesale CBDC can play a critical role as a safe and neutral settlement asset for international financial transactions. Furthermore, it demonstrates how central banks and the private sector can work together across borders to foster innovation. ”
For her part, Sylvie Goulard, Deputy Governor of the Bank of France, stated that “Jura demonstrates how wholesale CBDCs can optimize cross-border and cross-currency settlements, which are a key facet of international transactions.”
The wholesale CBDC experiment is part of a series of trials initiated by the Bank of France last year and is a continuation of the trials carried out under the SNB’s Helvetia Project. It also contributes to the ongoing work on cross-border payments in the G20, the central banks noted, while noting that it should not be seen as a plan to issue wholesale CBDCs.cryp