Bank of France and Swiss National Bank have successfully completed testing of cross-border payments in digital euros and Swiss francs.
Project Jura, named after the mountains between the two countries is a partnership between the Bank of France (BDF), the Swiss Innovation Center (BISIH), the Swiss National Bank (SNB), Accenture of Credit Suisse, Natixis, R3, SIX Digital Exchange (SDX) and UBS. The project was initiated by the Central Bank of France and continued a series of experiments to test international payments in central bank digital currency (CBDC).
Sylvie Goulard, Deputy Governor of the Bank of France said:
“With the great success of Jura, the wholesale CBDC experiment program launched by the Banque de France in 2020 is now completed. Jura demonstrates how wholesale CBDC can optimize cross‑currency and cross‑border settlements, which are a key facet of international transactions.”
The participants in the experiment came to the conclusion that the European financial system needs perfect and universal mechanisms for payments and settlements because the existing mechanisms include numerous intermediaries and additional elements of the financial market infrastructure. As a result, cross-border transactions have unreasonably high costs, they are slow, technologically complex, and potentially risky.
CBDC is a new technological approach for regulated financial institutions and central banks. A central bank-backed distributed ledger technology (DLT) based infrastructure can secure a financial ecosystem, offers more choice and competition in terms of cross-border payments and settlements.
Andréa M Maechler, Swiss National Bank Board Member said:
“As a small open economy, Switzerland requires efficient and robust cross‑border payment and settlement arrangements. Project Jura explores how distributed ledger technology can be successfully leveraged to map out how future‑proof cross‑border settlement between financial institutions could look like.”
The project participants tested direct transfers in euros and Swiss francs in the form of CBDC on a single DLT platform. The experiment was conducted under realistic conditions, using transactions with real value, in accordance with applicable regulatory requirements, as well as using payment versus payment (PvP) and delivery versus payment (DvP) mechanisms.
BISIH chief executive Benoît Cœuré said:
“Project Jura confirms that a well-designed wholesale CBDC can play a critical role as a safe and neutral settlement asset for international financial transactions. It also demonstrates how central banks and the private sector can work together across borders to foster innovation.”
While Project Jura was a success, both central banks have warned that a set of banking rules and monitoring procedures, as well as contingency procedures, need to be formulated to ensure that CBDCs can be used in practice.
Andréa M Maechler, said:
“It is an important experiment, the results have been very valuable, but there are many questions, both of a technological nature and very important policy questions which remain to be better understood.”
Central Banks of France and Switzerland announced the launch of a pilot project to test state digital currencies for international payments back in June this year.