The Swiss central bank is working together with the SIX stock exchange to study the use of digital central bank money in trading. SIX exchange unveiled this news on October 9 via a release on its site. The exchange noted that it had joined hands with the Swiss National Bank (SNB) to work on a proof of concept that seeks to achieve this goal.
In its statement, SIX said that its partnership with SNB sought to explore how to use digital central bank money to settle tokenized assets between market participants. Per the statement, SIX and SNB are conducting this study in line with the Center of Research into Innovative Financial Technologies.
This proof of concept will involve the SIX Digital Exchange (SDX). SDX will reportedly offer its platform to explore the technical possibilities of incorporating digital central bank money into DLT platforms. The first possibility involves the connection of the current Swiss Interbank Clearing System. The second option involves SNB issuing digital Swiss franc tokens to market participants on the SDX platform.
Commenting on this bullish move, Thomas J. Jordan, the chair of the governing body of the SNB said,
The SNB has for some time been closely following the digitalisation of the financial sector and technological innovations in the areas covered by its mandate. Through the cooperation at the BIS Innovation Hub Centre in Switzerland, the SNB will be able to further expand its expertise in the area of financial markets and their infrastructures,
SIX’s Focus on Tokenization
SIX has been working on a blockchain-powered digital exchange that would settle trades in crypto. According to a report, the exchange’s focus is on the tokenization of traditional assets such as shares and bonds. Per the exchange, tokenization would help minimize the time it takes to complete trades. SIX believes that through tokenization, completing a trade would take less than a second.
Thomas Zeeb, the head of securities and exchange at SIX said,
Innovation means breaking new ground. With the SIX Digital Exchange, we are following this path with a number of partners from the Swiss financial center. We are delighted to have the Swiss National Bank and the Bank for International Settlements at our side. Our proof of concept on the subject of digital central bank money for financial market participants on DLT platforms will not only provide technological insights, but will also send an important signal to all market participants to take steps to explore DLT technology and digital assets.
This news comes after SIX listed a joint BTC and ETH exchange-traded product (ETP). Bitcoin Suisse and Amun AG joined hands to join this product. Dubbed “ABBA,” the ETP comprises 90 percent BTC and 10 percent ETH.
Do you think SNB’s and SIX’s study on using digital assets could mean Swiss banks are ready to embrace the crypto sector? Let us know in the comments below.