- Switzerland could launch a proof of concept CBDC this year
- A retail digital currency is the immediate focus, with international transactions planned for the future
- The Swiss central bank co-authored a report on CBDCs earlier this month
Switzerland could be about to jump on the CBDC train and issue its own trial digital currency as soon as this year. Speaking recently at the Bund Summit, Benoît Cœuré, head of the Innovation Center of the Bank for International Settlements (BIS), stated that BIS plans to have a proof of concept CBDC ready by the end of 2020 with a view to a rollout in 2021.
Proof of Concept Could Come in Next Few Weeks
According to Cœuré, BIS intends to establish cross-border CBDC transactional channels with a number of central banks in the future, including the Hong Kong Monetary Authority of China and the Bank of Thailand, but the focus for now is a retail CBDC.
A proof of concept could be ready for testing by the end of the year, with results from the tests used to work on expanding the concept to include connections to existing payment systems, digital identity tracks, compliance monitoring, and more. To do this, Cœuré says, the blockchain will have to be upgraded.
BIS Warned of CBDC Side Effects
BIS is no stranger to the CBDC world, having produced a report earlier this month in conjunction with six other central banks entitled “Central Bank Digital Currency: Basic Principles and Core Features” which found that 80% of countries have conducted CBDC research, with some, most notably China, engaging in real world trials.
In the report, BIS echoed existing concerns regarding the impact of digital currencies on monetary policy and financial stability. The report found that large holdings of other countries’ CBDCs could have knock on effects such as severe exchange rate fluctuations, “digital dollarization” of other countries, and increased tax avoidance.
Last week, The Bahamas became the first country in the world to officially roll out a CBDC to its citizens after two years of development.
