Wholesale CBDC for Interbank Settlement

A landmark pilot by the Banque de France, Swiss National Bank, and the BIS Innovation Hub. It demonstrated atomic delivery-versus-payment (DvP) for a French digital euro and a Swiss franc wholesale CBDC on a single distributed ledger.

• Key Benefit: Eliminates Herstatt Risk by ensuring the final transfer of one asset occurs if and only if the final transfer of the other asset occurs.
• Business Impact: Reduces settlement times from days to minutes, freeing up billions in trapped capital for participating banks.
• Technology: Used a permissioned blockchain with regulatory nodes for oversight, proving compliance can be engineered into the system.

The largest cross-border CBDC pilot to date, involving the central banks of China, Hong Kong, Thailand, and the UAE, alongside over 20 commercial banks. It facilitates real-time, peer-to-peer foreign exchange and trade settlement.

• Key Benefit: Bypasses correspondent banking networks, slashing transaction costs by up to 50% and cutting settlement time from 3-5 days to seconds.
• Business Impact: Dramatically improves liquidity management for multinational corporations and reduces foreign exchange operational risk.
• Scale: The platform has processed over $22 billion in value through more than 160 transactions, proving viability at scale.

A series of experiments by the Swiss National Bank (SNB) and SIX Digital Exchange (SDX) to settle tokenized assets directly with a wholesale CBDC.

• Key Benefit: Creates a unified ledger for securities and money, removing the need for reconciliation between separate settlement systems.
• Business Impact: Reduces operational complexity and cost for issuing and servicing digital bonds and other capital market instruments.
• Proof Point: Successfully demonstrated that a central bank can safely provide settlement assets for a tokenized financial ecosystem, a critical step for the future of capital markets.

Test the core proposition: atomic settlement (Delivery vs. Payment) for government bonds or interbank repo transactions. This eliminates counterparty risk and settlement fails, which cost the industry billions annually. A PoC with a limited group of domestic banks validates the technology stack and operational model without disrupting live systems.

• Real Example: The Bank of France successfully settled over €100 million in simulated bonds on a private blockchain in 2020, proving technical viability.

Expand the network to include a correspondent bank or a foreign central bank to tackle the most painful and costly area: cross-border payments. A pilot can demonstrate 24/7 real-time settlement, slashing transaction times from days to seconds and reducing liquidity needs trapped in nostro accounts.

• ROI Driver: Project Dunbar (BIS Innovation Hub) showed multi-CBDC platforms could cut cross-border settlement costs by up to 50% by streamlining correspondent banking layers.

Justify the investment with hard metrics focused on operational transformation:

• Cost Reduction: Eliminate reconciliation, nostro account overhead, and manual exception handling.
• Capital Efficiency: Free up liquidity through atomic settlement and 24/7 availability.
• Risk Mitigation: Near-zero settlement risk and operational risk from legacy system failures.
• Example: A study by Oliver Wyman estimates DLT could save capital markets infrastructure $15-20 billion annually.

Acknowledge and plan for hurdles to ensure credible governance:

• Legal & Regulatory: Defining the legal status of wCBDC and smart contracts is paramount. Work with regulators from day one.
• Interoperability: The system must connect to diverse legacy platforms and potential future CBDC networks.
• Governance: A clear, multi-institutional model for network rules, upgrades, and dispute resolution is critical for adoption.
• Success Factor: Projects like Project Jura (Swiss National Bank) highlight the importance of a collaborative, test-and-learn approach with the private sector.