Thomas Moser: «We Test Digital Money Under Near-Real Conditions» –

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The Swiss National Bank is convinced of blockchain technology. However, central banker Thomas Moser says there no proof yet that digital currencies are better than fiat money, as he explains in an interview with

The first part of our exclusive interview with Thomas Moser was published on Wednesday. In it, the respected economist talks about the development of Bitcoin and the merits and weaknesses of the blockchain. The second part of the interview revolves around the issue of introducing digital central bank money.

Thomas Moser, in the first part of our interview, you highlighted the importance of innovation. A digital franc – an e-franc – would also be such an innovation. Do you think that you yourself, as a consumer, will one day use an e-franc?

I would like to say at the outset that the SNB has no plans to introduce such an e-franc for consumers. For Switzerland, we have come to the conclusion that currently, the risks exceed the benefits compared to the existing systems. But due to the development of more and more digital instruments, it is certainly possible that there could be something like an e-franc one day, but primarily for financial institutions only.

What is actually the difference between a franc that you pay with a credit card and the e-franc?

This is the key question, and it is the reason why we as a central bank have no pressure at all to introduce an e-franc. The benefits of the e-franc are not so clear. Consumers today can pay both with the usual electronic means or with cash. But an e-franc issued by the SNB would be free of counterparty risk, unlike the digital book money of financial institutions.

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Sweden is specifically working on launching electronic kronor, why not the SNB?

In Sweden, the situation is different from Switzerland in that cash is disappearing in everyday life.

«One advantage of cash is that you can use it to pay completely anonymously»

The more consumers switch to digital means of payment, the more likely it is that the question will arise as to whether digital central bank money might be needed. However, this is not an issue for us at the moment, because cash is very widely used in Switzerland and is regarded as an indispensable means of payment.

Are there other reasons why the SNB is rather reluctant about an e-franc?

In Switzerland, data protection and privacy are highly valued. One advantage of cash is that you can use it to pay completely anonymously. If, on the other hand, you pay digitally, a lot of data is generated. Not only financial data but also data about what you buy and where you are at any given time.

«The worst thing would therefore be if such an innovation did not work technically»

The introduction of digital central bank money would, of course, always have to include a discussion of what data is collected, how it is to be protected, and who gets access to what data.

One of the trump cards of the Swiss franc is the absolute trust of the population in this currency. How would trust be created in CBDC (Central Bank Digital Currency)?

I am convinced that trust in a central bank would theoretically transfer to a digital currency. If you trust the SNB, you trust that CBDC will work. Clearly, trust is a function of reputation, and reputation is accumulated past experience. That is why it would be important for a CBDC to work perfectly before it is launched. The worst thing would therefore be if such an innovation did not work technically or if it was even hacked. Trust would then be gambled away. Therefore, as I said, there is no reason to rush ahead with CBDC.

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From the outside, the SNB was initially rather hesitant about CBDC. Why was this the case?

We are very much interested in the security of the financial infrastructure. In addition to the reasons already mentioned, this also limits somewhat our willingness to experiment. We want to allow innovation in payment traffic, but new concepts and products must first prove themselves.

«The final proof that this new system is better than the old one is still pending»

Hence the «Helvetia» project, in which we are investigating the possibilities of a digital currency for payments between financial market participants. What we have proven in the first project phase of «Helvetia» is that you can provide exactly the same services with DLT as with traditional infrastructure. It works wonderfully – but just not much better. Other central banks like the Bank of Canada made the same experiences as we did and the final proof that this new system is better than the old one is still pending.

How do things look from the perspective of the financial center?

You’ll have to ask the financial institutions directly. But it is conceivable that it could result in efficiency advantages for the banks in certain areas, for example by simplifying the purchase processing and management of securities. It’s easy to share data on the blockchain and automate processes. Whether this technology will actually lead to the hoped-for efficiency gains certainly remains to be seen. However, it is important for us to have a good understanding of the impact of this technological change.

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What do you hope to learn from the second part of the «Helvetia» project?

We will work through and set up the digital currency for the financial center in such detail that we could theoretically go live with it. This still involves the last mile on both sides, i.e., for the banks and also for us.

«We are not under any pressure to launch a CBDC»

What we are also looking at in greater depth is what such a system would look like in cross-border payment traffic and what other legal issues need to be clarified. The advantage of «Helvetia» is the conditions under which we are experimenting. Since the digital exchange SDX wants to launch its platform this year, we can test the CBDC in an almost real environment. This distinguishes our project from pure research projects of other central banks.

But you are not yet ready to implement CBDC?

No. For us, it is only a feasibility study. From our point of view, the development of the SDX and our CBDC project are running independently. SDX does not need CBDC to go live. And for our part, we are not under any pressure to launch a CBDC for financial institutions.

How much resources does the SNB put into the development of CBDC?


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