The Swiss city of Basel recently settled a series of tokenized bonds using a wholesale central bank digital currency (WCBDC) as part of Helvetia III, a WCBDC pilot program. The system is designed to prioritize efficiency, as having on-chain funds bypasses the need for reconciling transactions with a private bank account.
Basel Issues Tokenized Bonds Settled Using a Wholesale CBDC
The city of Basel in Switzerland has achieved a milestone by completing what might be the first regulated settlement of tokenized bonds in a production environment. As part of the Helvetia III wholesale central bank digital currency (WCBDC) pilot program, the city issued a tokenized bond via the Basel Cantonal Bank that was settled using a WCBDC.
The issuance, valued at almost $120 million, was managed by the Swiss National Bank and the SIX digital exchange, the entity in charge of tokenizing the Swiss francs for the transactions. Using on-chain money is said to make these transactions cheaper and more efficient, given that participants don’t have to wait for private bank redemptions in the settlement process.
David Newns, head of SIX digital exchange, praised this development as a new step in modernizing securities markets. He stated:
The settlement of the first securities transactions in WCBDC … represents a major milestone for the entire industry on the road of adoption of a tokenized, DLT based financial markets infrastructure.
The Helvetia III pilot involves six commercial banks and the SIX digital exchange. The next step for this WCBDC is to be used for repo transactions, something that had already been hinted at by the SIX digital exchange in November.
All of these operations use R3’s Corda blockchain platform, with its CEO David Rutter stating the endeavors represent “another key milestone for the wider development of wholesale CBDC and digital assets which will importantly be used in a live production environment.”
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