Swiss banks, the cantons of Basel City and Zurich have successfully issued digital bonds using real CHF central bank digital currency (wCBDC) on SIX Digital Exchange (SDX). This is the very first issue of this kind using the Swiss National Bank’s (SNB) wCBDC.
The digital bonds issued by Basel-City (ISIN: CH1265890678) and Zurich (ISIN: CH1306117073) represent a bold step in the use of distributed ledger technology (DLT) in mainstream financial operations.
This step is part of Project Helvetia Phase III, launched by the SNB on November 2, 2023, aimed at facilitating pilot wCBDC transactions for financial institutions from December 2023 to mid-2024. As part of this ambitious project, Basler Kantonalbank and Zürcher Kantonalbank as issuing agents for the cantons.
The use of DLT in this financial market infrastructure is a pivotal moment, as David Newns, head of SIX Digital Exchange, notes. He said,
“The settlement of the first securities transactions in wCBDC in a developed economy on regulated, blockchain-based infrastructure in a production environment represents a significant milestone for the entire industry,”
SIX Digital Exchange, a fully regulated financial market infrastructure for digital assets, is licensed by the Swiss financial markets regulator, FINMA, and functions as both an exchange and a central depository.
The implications of this development extend beyond the Swiss financial markets. It highlights the potential for efficiency gains and greater transparency in global financial transactions. Furthermore, it demonstrates the evolving role of tokenized, DLT-based financial market infrastructure, potentially setting a new standard in the industry.
As emphasized by Thomas J. Jordan, Chairman of the Board of Directors of the Swiss National Bank,
“With this pilot project, we are now making it possible for the first time to settle transactions involving tokenized assets safely and efficiently on a regulated and productive DLT platform using true wholesale CBDC.”
It is important to note that while all blockchains are some form of DLT, not all DLTs are blockchains. Blockchain is a specific type of DLT that uses cryptography to control new units, and is distinguished by the fact that the data structure is bundled into blocks and then linked together sequentially. However, DLT can also contain other structures that do not necessarily organize data into blocks or link them together.
The pilot explicitly emphasizes the use of DLT instead of blockchain, indicating that the Swiss financial sector is exploring a wider range of distributed ledger technologies that go beyond the traditional blockchain model.