SIX and the SNB explore tech approaches for the use of digital central bank money in settlement of tokenised assets
As part of a proof of concept, SIX is working with the SNB to explore technological options to make digital central bank money available for the trading and settlement of tokenised assets between financial market participants.
The technological foundation for its feasibility is provided by the SIX Digital Exchange, which uses distributed ledger technology.
The SIX Digital Exchange (SDX) continues to progress according to plan, making it the world’s first distributed ledger technology (DLT)-based platform for the issue, trading, settlement and custody of digital assets.
This exchange innovation is now joining forces with innovation in the currency space: SIX is working with the Swiss National Bank (SNB) on a proof of concept to explore how digital central bank money could be used in the settlement of tokenised assets between market participants. This study is being conducted in line with the Centre for Research into Innovative Financial Technologies (the BIS Innovation Hub Centre), which was recently established by the SNB and the Bank for International Settlements (BIS) in Switzerland.
As part of this proof of concept, SDX will provide its platform to explore technical possibilities for integrating digital central bank money into DLT platforms. Possibilities include the connection of the existing Swiss Interbank Clearing System or the issue of digital Swiss franc tokens by the SNB for financial market participants (a so called, wholesale central bank digital currency) on the SDX system.
The economic opportunities that could result from the availability of digital central bank money in the future are significant. The DLT-based exchange of ‘tokenised’ assets and digital central bank money has the potential to reduce counterparty risk and enable innovative forms of value creation in finance.
Jos Dijsselhof, CEO SIX, says: “As the operator of the Swiss financial market infrastructure, we welcome the initiative of the SNB and the BIS to conduct more research into innovative financial technologies in Switzerland. We are pleased to contribute to this initiative and, through SIX Digital Exchange, to explore the technological possibilities with which the SNB could support token-based financial ecosystems in the future by providing digital central bank money for financial market participants.”
Thomas Zeeb (pictured), Head Securities & Exchanges, SIX, says: “Innovation means breaking new ground. With the SIX Digital Exchange, we are following this path with a number of partners from the Swiss financial centre. 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.”