The central bank of Switzerland will work with the SIX Digital Exchange (SDX) to study how digital currencies issued by central banks can be used to settle tokenized assets. According to an announcement from the bank, SDX will develop a proof-of-concept for the study together with the Swiss central bank as well as the Bank of International Settlements via its BIS Innovation Hub.
SDX will avail its platform as a way to study how CBDCs can utilize Distributed Ledger Technology. According to the CEO of SDX, the company was pleased to be part of the effort to explore the possibilities that exist for CBDCs.
The announcement by the central bank added that tokenized assets and CBDCs based on the DLT have the potential to lower counterparty risk and lead to the creation of innovative financial solutions. SDX is going to research the technical options for the creation of a digital Swiss franc. Besides that, it is going to research how it can be connected to the Swiss Interbank Clearing System.
According to an SDX official, the proof-of-concept for the establishment of a CBDC using the DLT will provide an important signal to the financial world that it was time to look into the DLT. Besides that, it will be an opportunity to gain technical insight into how it would work.
An official from the bank of international settlements, which is often called the central bank of central banks, had said that they were supporting various central banks globally that were looking into the possibility of launching a central bank digital currency.