6 7  All algorithmic stablecoins, which have no backing at all, have failed so far, without exception. The collapse of the Terra stablecoin in October 2022 is the latest in a long line. In Switzerland, these are the SIC system and the SECOM system. Page 9/11  The second model involves integrated settlement, using a Swiss franc wholesale CBDC (cf. slide 12). In Phases I and II of Project Helvetia, tests of the issuance of a Swiss franc wholesale CBDC were conducted on the test environment of SIX Digital Exchange (SDX). Building on the insights gained, we intend in particular to further explore the operational basis that would enable the SNB to issue wholesale CBDC for settlement purposes if necessary in the future. As part of the project, we will issue real wholesale CBDC on SDX for a limited time and test selected transactions with market participants. The third model involves integrated settlement using private Swiss franc token money that is protected under bankruptcy law (cf. slide 13). As part of the project we aim to examine ways in which private token money that is backed one-to-one by sight deposits at the SNB, can be legally structured in such a way that, in the event of the bankruptcy of the token issuer, it would have a risk profile comparable to that of central bank money. We will be reporting on the projects and the lessons learnt in due course.
In 2021, Switzerland became one of the first countries to adopt a comprehensive legal framework for the application of DLT. Besides various adjustments to securities law, a new licence category for DLT trading facilities has been created under the Financial Market Infrastructure Act. This has created the basis in Switzerland for a regulated token ecosystem. Where do you find interesting applications of DLT in today’s financial system? The short answer is in the area of financial market infrastructure, which includes trading platforms, securities settlement systems, and payment systems such as the SIC system, via which transactions are settled. DLT promises efficiency gains in post-trading, i.e. in the clearing, settlement and custody of assets. A shared ledger increases transparency and simplifies the booking of transactions. In addition, it eliminates the need for costly and error-prone reconciliation processes between different databases on different systems. Moreover, DLT also allows assets such as securities, works of art or money to be securitised in the form of digital tokens, represented in a decentralised and fraud-proof network, and managed. Standardisation allows assets of different types to be represented as tokens on a shared infrastructure. Transfers of tokens can be programmed in the form of ‘smart contracts’. DLT enables the efficient and low-risk settlement of transactions. For example, the transfer of tokenised assets versus tokenised money can be effected conditionally according to preprogrammed logic. 5 It replicates the payment process with cash, where the exchange of money and goods can take place simultaneously on a delivery-versus-payment basis.