The Bank for International settlement (BIS) is set to partner with the French and Switzapex banks to test run wholesale central bank digital currency (wCBDC) for cross-border settlement. A top private consortium firm, Accenture, will be in charge of the trial.

BIS, France, and Swiss Central Banks Partner for A Test wCBDC

Central banks of France and Switzerland are considering a wCBDC for transactions between the two nations. This common CBDC will be in digital euro and Swiss franc; it marks the first time this particular use case will happen.

The trial, termed ‘Jura,’ is already attracting the attention of other key players in the financial sector, especially the bank of international settlements (BIS). Other parties that have shown interest include six (a Swiss exchange), R3 (a blockchain software firm), Natixis (a French investment bank), Suisse (a top lender credit firm), and UBS (a top Swiss bank).

The Banque de Frances has announced that the project is in the trial phase and will explore how a bank-to-bank whole settlement can work.

Banque De France Tweet. Source: Twitter

Purpose of the wCBDC

The objective of the DLT-supported project is to test trades between the euro wCBDC (wCBDC) and another financial tool. Also, it will trial the possibility of the Swiss franc wCBDC and the euro wCBDC exchange. The french and swiss banks will provide the settlement for these transactions.

Deputy governor of the Banque de France, Sylvie Goulard, opined that “the Banque de France strongly believes in the potential benefits of wCBDC to achieve effectiveness and optimal security with financial transactions.” 

A member of the Swiss national bank, Andrea M. Maechler, agreed with Sylvie and further said, these kinds of projects “keep central banks abreast of changes in technological advancements.”

She also revealed that the Swiss national bank is developing a blockchain project called project Helvetia which can settle tokenized assets with wCBDCs. The two central banks involved in this trial have reiterated that they are only experimenting with this wCBDC, and there is no guarantee that they would release a wCBDC. However, BIS Innovation Hub Boss, Benoit Coeure, said this Jura project would explore the possibility of using wCBDCs for improved speed, efficiency, and transparency for cross-border payments.

He believes the success of this trial will enhance G20’s priority of achieving cross-border payment settlement. He went on to say, “we are elated to be involved in this project as it aligns perfectly with other CBDC trials we are also processing.”

Financial institutions with central bank accounts are the most common financial institutions that utilize wholesale digital currencies. However, the general public usually uses the retail CBDC, which is the most common type of CBDC.

Other Central Banks Issuing CBDCs

Central banks of China, Russia, the U.S., and the eurozone are already developing CBDC-related projects. Arguably, the most advanced CBDC project is that of the People’s Bank of China, as it has completed several local trials and is about to perform a cross-border test of the digital yuan with Hong Kong.

When the bank of France released its wCBDC pilot program last year, Sylvie Goulard remarked that “the Euro-system is taking active steps in innovating digitized payments. Also, the Banque de France thoroughly believes that the wholesale central bank digital currency portends great benefits.”

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