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    Switzerland is practically ready to launch a wholesale central bank digital currency (CBDC).

    Working in concert, the Bank for International Settlements (BIS), the Swiss National Bank (SNB) and the country’s stock exchange, SIX, have test-driven the integration of wholesale CBDC settlement.

    Also included in the prototype were five commercial banks: Citi, Credit Suisse, Goldman Sachs, Hypothekarbank Lenzburg and UBS.

    Wholesale CBDC is not to be confused with a digital currency issued by a central bank that would find its way into retail bank accounts, something Switzerland has already ruled out.

    “Wholesale” in this context is all about connecting financial market infrastructures and streamlining transactions, so that a digital cash token can be instantly swapped with a token representing another financial asset, for instance, and done in such a way that any credit risk is removed from the system.

    When CBDC?

    So far, no one at the SNB or SIX has said the launch of a wholesale CBDC in Switzerland is imminent, despite seeming to have stolen a march on most of the world. That said, most countries have begun at least kicking the tires on CBDCs of some form.

    A report issued earlier today by the U.K.’s House of Lords Economic Affairs Committee concluded that a retail-facing CBDC might be “a solution in search of a problem.” However, the Lords report was more optimistic about the introduction of a wholesale CBDC, which could “enhance efficiency in securities trading and settlement,” adding that “further exploration and experimentation are necessary.”

    Back in Switzerland, stalwarts of traditional finance are giving their stamps of approval.

    “We have demonstrated that innovation can be harnessed to preserve the best elements of the current financial system, including settlement in central bank money, while also potentially unlocking new benefits,” BIS Innovation Hub Head Benoît Cœuré said in a statement. “As [distributed ledger technology] goes mainstream, this will become more relevant than ever.”

    Still, it’s unclear whether Switzerland will begin a third phase of its wholesale CBDC prototype, dubbed “Project Helvetia.”

    The testing, which took place over three days at the start of December 2021, proved that issuing a wholesale CBDC on a DLT platform operated and owned by a private-sector company (Swiss stock exchange owner SIX, in this case) was both operationally possible and feasible under Swiss law, according to a press release.

    Pending decision?

    In previous interviews with CoinDesk, executives from the Swiss National Bank and SIX had hinted that testing of a wholesale CBDC was close to completion and really just required a policy decision to give it the green light.

    Read more: Swiss Central Bank Ready to Run With wCBDC in January: ‘Just Takes a Policy Decision’

    “Project Helvetia […] allowed the SNB to deepen its understanding of how the safety of central bank money could be extended to tokenized asset markets,” Andréa M. Maechler, a member of the governing board of the Swiss National Bank, said in a Thursday statement.

    The second phase of Helvetia explored the settlement of domestic interbank transactions, plus monetary policy transactions between the central bank and commercial banks. Cross-border transactions were also tackled, involving a transaction from a Swiss bank to Citigroup in London.

    This involved connecting the SIX Digital Exchange (SDX) distributed ledger (built using the R3 Corda blockchain) with the existing Swiss real-time gross settlement system – SIX Interbank Clearing, which has been operated on behalf of the Swiss National Bank since 1987 – as well as the respective core banking systems.

    “To continue fulfilling their mandates of ensuring monetary and financial stability, central banks need to stay on top of technological change,” Maechler said.

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