Project Jura - Switzerland and France Put CBDC Transactions To The Test

In an exciting exploration of the real-world potential and challenges surrounding the adoption of Central Bank Digital Currency (CBDC) the Swiss and French central banks, in partnership with the Bank for International Settlements (BIS) Innovation Hub announced their first series of cross-border trial transactions.

Benoît Cœuré, Head of the BIS Innovation Hub, said:

“The G20 has made enhancing cross-border payments a priority and laid out a multi-year roadmap to coordinate efforts. The experiment contributes to this work by exploring how wCBDC could enhance speed, efficiency, and transparency in cross-border use cases.”

The test phase, entitled Project Jura, will focus on bank-to-bank ‘wholesale CDBC’ (or wCBDC) transactions, rather than the less controlled world of public payments. During the test, both nations will make cross-border settlement payments using their respective digital currencies.

 It Takes a Village

As with any new rollout of this magnitude, it is not a matter of loading up the wCBDC app and paying a preloaded beneficiary. In fact, just getting to this point in the project took the cooperation of the Swiss UBS bank, the Credit Suisse Groups and the French corporate and investment bank Natixis.

Sylvie Goulard, Deputy Governor of the Banque de France, said:

“The Eurosystem is engaging in innovation and adapting its actions to the strong trend towards the digitalisation of payments. 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.”

Andréa Maechler, Member of the Governing Board, Swiss National Bank, noted:

“It is essential for central banks to stay on top of technological developments. We are looking forward to expanding this analysis to a cross-border context by participating in this exciting initiative.”

The expertise of BIS Innovation Hub, the Swiss securities and commodities firm SIX Digital Exchange, fintech specialists R3 and Innovation Hub were called on to ensure Project Jura runs smoothly from a technology and data security perspective.

The Road Ahead

The test will be a simple one for anyone familiar with international monetary transactions. To ensure that the speedy transmission, accurate recording, and correct accounting of any funds sent or received using a wCBDC the following steps will be followed:

“… the exchange of the financial instrument against a euro wCBDC through a delivery versus payment (DvP) settlement mechanism and the exchange of a euro wCBDC against a Swiss franc wCBDC through a payment versus payment (PvP) settlement mechanism.”

The most important aspect of these transactions is the DvP and PvP payments, which are defined as:

• Delivery versus Payment (DvP): This type of transaction ensures that the securities being “purchased” are only transferred after payment has been received and proven.
• Payment versus Payment (PvP):  This type of transaction ensures that the promised payment of a specific currency only occurs once the provable payment in another currency has been received.

With the regular purchase of cryptocurrencies via exchanges on the blockchain converting the fiat currency into wCBDC is the easy part. Once the trial proves that countries will be able to safely make and receive payments, via DvP and PvP settlements, it opens the market up for large scale testing in the public domain.