June 11, 2021 / banks

Central Banks Of France And Switzerland To Test Cross-Border Transactions With CBDC

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The pilot involves the not yet launched digital euro for business, the Swiss franc, and an intermediate instrument of French Central Bank based on distributed ledger technology (DLT).

On the website of the Swiss National Bank, information appeared that it, together with the Central Bank of France (Banque de France) and representatives of the private sector, is working on testing a model of cross-border interbank CBDC payments between legal entities.

The project should help assess the potential benefits and challenges of conducting international business payments using digital government currencies. The model was named Jura – after the mountain range separating France and Switzerland.

Two central banks partner with BIS Innovation Hub and a coalition of partners led by Accenture, which includes Credit Suisse, Natixis, R3, SIX Digital Exchange, and UBS.

The experiment involves cross-border settlements with a still non-existent digital euro, Swiss franc, and a kind of “French digital financial instrument” based on distributed ledger technology (DLT). The service is likely to act as an intermediary for payments.

As part of the pilot, participants are going to test the conversion of CBDCs to euros using a delivery versus payment (DvP) settlement mechanism and exchanging CBDCs in euros for CBDCs in Swiss francs using a payment versus payment (PvP) settlement mechanism. The transactions will be settled between banks located in France and Switzerland, respectively.

As a reminder, SWIFT and Accenture have released a joint preview of the study in the field of digital settlements. Since November 2020, they have been analyzing scenarios for the development of the global market for decentralized and tokenized payments and are trying to determine their place in the new ecosystem.

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