Bank of France, Swiss Innovation Center and Swiss National Bank have successfully completed testing of cross-border payments in digital euros and Swiss francs.
Project Jura is a public-private partnership involving the Bank of France (BDF), the Swiss Innovation Center (BISIH), the Swiss National Bank (SNB), and a consortium led by Accenture and consisting 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).
“Project Jura completes the Bank of France experiment program and demonstrates how the digital currency of the Central Bank can optimize cross-border settlement. This is a key aspect for future international transactions, ”said Sylvie Goulard, Deputy Governor of the Bank of France.
The participants in the experiment came to the conclusion that the European financial system needs perfect and universal mechanisms for payments and settlements. However, the existing mechanisms include numerous intermediaries and additional elements of the financial market infrastructure. As a result, in addition to unreasonably high costs, international transactions are slow, technologically complex and potentially risky.
CBDC is a new technological approach to increased access of regulated financial institutions to central bank resources. A central bank-backed distributed ledger technology (DLT) -based infrastructure, in addition to a potentially secure financial ecosystem, offers more choice and competition in terms of cross-border payments and settlements.
“Switzerland is a small country with an open economy, so it needs efficient and reliable mechanisms for cross-border payments and settlements. The experience gained from Project Jura has shown how DLT can be successfully used for cross-border settlements between financial institutions, ”said Andréa M Maechler, SNB Board Member.
Project participants tested direct transfers from CBDC to Euros and Swiss Francs 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.
“Project Jura shows that a well-designed government cryptocurrency 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 spur innovation, ”said BISIH chief executive Benoît Cœuré.
While Project Jura was deemed a success, 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.
Also, the project participants noted that the decision to continue testing or release their own cryptocurrency will be made by individual central banks independently. Recall that the 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.