The Bank of France and the Swiss National Bank have joined hands to launch the trial of cross-border transactions using central bank digital currencies (CBDC).
Announced on Thursday, the Bank of International Settlements (BIS) Innovation Hub is a partner of the two central banks in the trial, which will be the first of such kind in Europe. Additionally, a private consortium of companies, including Credit Suisse, Natixis, R3, SIX Digital Exchange and UBS, led by IT giant Accenture are also involved in the trial.
Dubbed Project Jura, the two central banks will focus on wholesale transacting using a digital euro and a digital Swiss franc through a payment versus payment mechanism.
“The Banque de France is convinced of the potential benefits of wholesale central bank digital currency to provide maximum security and efficiency in financial transactions and opened last year an experimental program to make progress in this area,” the Bank of France Deputy Governor, Sylvie Goulard, said.
Accelerating CBDC Trials
Both the French and Swiss central banks have been experimenting with CBDC individually. The Bank of France became one of the first European central banks to test digital euros in real-world transactions with a private player.
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In addition, the Swiss counterpart was involved in CBDC development with BIS under an initiative called Project Helvetia.
“It is essential for central banks to stay on top of technological developments,” said Andréa M Maechler, Member of the Governing Board, Swiss National Bank. “We are looking forward to expanding this analysis to a cross-border context by participating in this exciting initiative.”
The Hong Kong arm of the BIS Innovation Hub started a similar alliance between the central banks of Hong Kong, China, and the UAE for experimenting with wholesale cross-border transactions.
“The experiment contributes to this work by exploring how wCBDC could enhance speed, efficiency and transparency in cross-border use cases. The BIS Innovation Hub facilitates central bank experimentation into technological public goods,” Benoît Cœuré, Head of the BIS Innovation Hub, added.
This is the final part of a three-part series of articles about the state of blockchain in Europe. The series covers the blockchain scene in some of the most important European nations. I would like to thank PR firm Wachsman for sharing with me the facts & figures and the commentaries present in this series. Part one may be read here and part two, here.
The Netherlands and Switzerland are the remaining two European countries whose blockchain spaces will be reviewed in this third & final part.
It will not be incorrect to say that the Netherlands is on the rise on the global blockchain scene. This European nation recently hosted the Odyssey Hackathon, the biggest blockchain and AI hackathon in the world. The event was supported by the Netherlands Authority for the Financial Markets (AFM), the Ministry of the Interior and Kingdom Relations of the Netherlands, the European Union Regional Development Fund, De Nederlandsche Bank (the Dutch Central Bank), KLM and Deloitte. With 1,500 people in attendance, it saw 100 teams compete for €200,000. The Special Envoy of Startup Delta, Prince Constantijn van Oranje-Nassau, also supported the hackathon.
The Netherlands is home to 135 blockchain startups.
Night view of the Swiss canton of Zug and its lake. Crypto Valley Association, an autonomous, government-backed alliance founded to leverage Switzerland’s strengths to create the world’s foremost blockchain and cryptographic ecosystem, is based in Zug.
The presence of state-of-the-art centers and knowledge hubs like Crypto Valley, which hosts 20% of the worldwide blockchain market; flexible regulatory bodies and the government’s strong encouragement have all enabled Switzerland to thrive as a leading hub for blockchain revolution. Switzerland is also the ICO capital of Europe, where firms raised $456 million in 2018, and $1.46 billion in 2017. Startups in this European nation received nearly 1.24 billion francs (almost $1.25 billion) of venture capital in 2018, about 32% more than the year before.
As for the number of DLT startups operating in Switzerland, there are 712 of them (out of 750 companies in the Crypto Valley) as of Q1 2019. Demonstrating the breadth of firms in the Swiss blockchain cluster is the startup Utopia Music, which is a new entrant into the Crypto Valley top 50 and the only media and entertainment firm to do so.
Switzerland also hosts four Unicorn startups (firms already worth billions). These startups include Dfinity, Cardano, Bitmain and Ethereum.
Crypto Valley Association president Daniel Haudenschild said, “At the heart of the blockchain movement, the Crypto Valley Association has been central to creating Switzerland’s leading position as a pioneer in cryptocurrency and blockchain. The valley is home to some of the most innovative and influential blockchain companies in the world, only made possible by the friendly regulatory environment, secure and predictable legal framework, world-class infrastructure, talent pool, sound policies and economic strength here in Switzerland.”
Armin Schmid, CEO of Swiss Crypto Tokens, part of the Bitcoin Suisse Group, stated, “At Swiss Crypto Tokens, we consider ourselves very fortunate to call Switzerland home. The Government here has always shown great encouragement of the blockchain community and this has undoubtedly been a huge part of our success in positioning Switzerland as the ‘Crypto Nation’. In addition, given how developed and influential the Swiss financial sector is — managing around 27.5% of all global cross-border assets — Switzerland is an ideal environment with a stable economy and currency for liquidity-providing instruments such as the CryptoFranc, our Swiss-Franc pegged stablecoin.”
End of Series
Image credit – Mensi (CC BY-SA 3.0)