Central bank money and commercial bank money complement each other in the current monetary system. Central bank money comprises sight deposits of banks held at the central bank and banknotes, whereas commercial bank money comprises client deposits at banks. Payments between banks are settled in central bank money, thereby anchoring the value of commercial bank money. It is essential for a central bank to maintain this anchor role of central bank money in the monetary system, irrespective of future technological innovations.
Distributed ledger technology and the tokenisation of assets promise to improve financial market infrastructures. For the SNB, this raises the question: How can transactions with tokenised assets be settled in central bank money? As part of a pilot known as Project Helvetia III, the SNB is issuing tokenised Swiss franc central bank money to financial institutions (wholesale central bank digital currency, or wholesale CBDC). The pilot is unique in making wholesale CBDC available for settling commercial transactions on the same third-party platform where the tokenised assets are held. The pilot transactions conducted so far have been successful, but important questions remain.
Technological change also affects retail payments by individuals and businesses. The SNB has upgraded its payment system, so that retail payments can now be settled between bank accounts within seconds and around the clock. With the ongoing improvement of the payment system, the SNB currently sees no need in Switzerland for digital central bank money for the general public.