Two European banks want to test digital currencies

If this experience materializes and everything goes well, we can enter a new era. In an official statement, Banque de France and the Swiss National Bank say they want to join forces to launch a new payment system for cross-border transactions. This system will operate on digital currencies. (CBDC) produced by the central bank. But be careful, this is just an experimental phase.

CBDC (Central Bank Digital Currency) Abstract cryptocurrency.  With dark background and world map.  Graphic concept for your design.

Facilitating cross-border payments between banks

Are veterans of financial systems willing to adapt to new offerings in the market? Obviously yes … according to the press release published by Bank of France

“The Eurosystem is committed to innovation and is adapting itself to the strong trend towards digitalization of payments. Banque de France is convinced of the potential benefits of a central bank’s wholesale digital currency to maximize the security and efficiency of financial transactions. “ said Sylvie Goulard, Deputy Governor Bank of France

What exactly will change in this new project? Cross-border payments will be made between French and Swiss banks. The project is based on DLT platform thanks to which it will be possible test transactions between a financial instrument and a CBDC. In addition, he will explore the possibility exchange euro wCBDC for Swiss franc wCBDC

For both types of transactions, the central banks of France and Switzerland will determine the conditions that must be met. However, in the press release, the institutions are not considering establishing a CBDC. Moreover, this step is not in the project menu.

New players in sight

If a Bank of France and Swiss National Bank are the main contributors to the project, but not the only ones working on it. Experience Swear – project name – attracted other institutions, including Bank for International Settlements (BIS), Credit Suisse, investment bank Natixis and Swiss banking giant UBS. Other big brands are expected to appear on the project: blockchain software company R3 and Swiss stock exchange SIX.

In accordance with Andrea M. Machler, member of the board of directors Swiss National Bankprojects like this deserve support. They are “It is important that central banks are kept abreast of technological advances.”

Ms Andrea also notes that the Swiss National Bank is already working on the Helvetica project. The goal is to use blockchain to calculate tokenized assets using wCBDC.

The huge project uniting Banque de France and the Swiss National Bank could herald several changes in the use of digital currencies. Will they become legal and officially useful for transactions? There is only one element that can answer us: the future.

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The comments and opinions expressed in this article are those of the author only and should not be construed as investment advice. Do your own research before making any investment decisions.

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