Switzerland’s central bank is exploring the use of digital currencies for trading
Switzerland’s central bank is working with the country’s stock exchange to examine the possible use of digital currencies in trading.
In a statement on Tuesday, Swiss stock exchange operator SIX Group said it was partnering with the Swiss National Bank (SNB) on a proof of concept to “explore how digital central bank money could be used in the settlement of tokenized assets between market participants.”
The research will be carried out at a hub set up by the SNB in partnership with the Bank for International Settlements, an umbrella group for the world’s largest central banks.
SIX has been working on a digital exchange that would use blockchain, the underlying technology behind cryptocurrencies like bitcoin, to issue and settle trades in digital assets.
A big focus of the group is the “tokenization” of traditional assets like shares and bonds — essentially creating digital versions of such securities — a move the firm claims would reduce the time it takes to complete a trade, from a number of days down to less than a second.
Thomas Zeeb, head of securities and exchanges at SIX, recently told CNBC that it was seeing increased interest in the tokenization of niche investments like art gallery collections.
“Some of the Asian markets are quite keen on tokenizing things that are related to a passion,” he said in an interview last month. “You could tokenize part of the collection of the Museum of Modern Art in New York, thereby fund some of that collection and attach to that access to the twice-a-year gala event.”
“That kind of passion investing is something that we’re seeing quite a lot of interest in,” he added.
The news comes as Facebook looks to introduce its libra cryptocurrency. Major global central banks have been looking further into the creation of their own digital currencies, with China’s central bank having recently said it is close to releasing its own virtual coin.
Meanwhile, Bank of England Governor Mark Carney has proposed a digital alternative to the U.S. dollar to become the world’s reserve currency.