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Revolutionizing Swiss Currency: SBA's Proposal for a Digital Swiss Franc through Deposit Tokenization

Revolutionizing Swiss Currency: SBA's Proposal for a Digital Swiss Franc through Deposit Tokenization

Wednesday, 15 March, 2023

The Swiss Bankers Association (SBA) put out a report about a digital Swiss franc on March 14, 2023. Essentially, they're suggesting that creating a "tokenized" deposit on the blockchain, issued by regulated banks, could be a game-changer for Switzerland. This move could not only increase the country's competitiveness and innovation but also strengthen its independence. It's an interesting proposal and one worth considering for the future of Swiss banking.


Basically, the idea behind the DT comes from splitting up deposits using blockchain tech. The DT is essentially digital Swiss francs that can be customized with programming. It can be used for things like digital trading assets, making payments in the "Economy 4.0," and decentralized finance. Since the DT is a platform technology and is available to everyone, we expect to see more creative uses for it in the future.

 

Why the Digital Token and What Are Its Legal Considerations?

The primary purpose of digital currency is to facilitate the trading and settling of digital assets. In the future, it will also be used for machine-to-machine payments within the Internet of Things, Web3, and the Metaverse.

However, the reliability of privately issued stablecoins is often in question due to concerns about adequate backing. The authors of the white paper suggest that a trustworthy digital currency with broad legitimacy equivalent to conventional money is necessary. In addition, they emphasize that if commercial banks were to issue a digital token, it should not undermine the exclusive power of the Swiss National Bank to issue digital central bank money in the future. Essentially, it's important to ensure that the SNB remains the only authority when it comes to issuing digital central bank money.

The conclusion drawn in the white paper is that the DT (distributed technology) can prove to be a useful tool in maintaining the financial center's competitiveness, as well as boosting the innovative capabilities of Switzerland's digital economy. At the same time, it can also protect the country's economic and technological independence. Furthermore, households and companies can benefit greatly from the reliability, security, usability, and availability of payment options.

 

Source: 

https://www.swissbanking.ch/_Resources/Persistent/9/4/1/1/941178de59b98030206fc15ac8c99012f65df30b/SBA_The_Deposit_Token_EN_2023.pdf

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