In a recent conference titled “Towards the future monetary system,” hosted in Zurich on April 8, 2024, Mr. Thomas Jordan, the Chairman of the Governing Board of the Swiss National Bank (SNB), made remarks that have sparked widespread discussion and misinterpretation in the media regarding the SNB’s stance on Central Bank Digital Currency (CBDC). Numerous headlines emerged, asserting that Mr. Jordan was against CBDC adoption, contradicting the essence of his discourse. However, a closer examination of Mr. Jordan’s full interview reveals a nuanced perspective that has been overlooked by many outlets.
The full speech was published by the Bank of International Settlements, and according to them, “The views expressed in this speech are those of the speaker and not the view of the BIS.”
At the outset of his speech, Mr. Jordan emphasized the importance of adapting to rapid technological changes in the financial landscape while maintaining monetary and financial stability. He unveiled Helvetia III, a pioneering pilot project launched by the SNB, which explores the issuance of Swiss franc digital central bank money for financial institutions. Contrary to the prevailing narrative, Mr. Jordan’s remarks neither dismiss nor oppose CBDC adoption; rather, they underscore the SNB’s proactive approach in harnessing the potential of new technologies.
Mr. Jordan elucidated the role of central bank money as the anchor of the monetary system, highlighting its significance in ensuring stability and trust. He delineated the coexistence of central bank money and commercial bank money, stressing the pivotal role of central bank money in settlement mechanisms. Amidst the rising prominence of tokenisation, Mr. Jordan addressed the challenge of settling tokenised assets with central bank money, leading the SNB to initiate the wholesale CBDC pilot, Helvetia III.
The pilot project, conducted in collaboration with regulated financial market infrastructure, exemplifies the SNB’s commitment to exploring innovative solutions for efficient settlement mechanisms. Mr. Jordan underscored the potential of wholesale CBDC in maintaining the benefits of settlement in central bank money within a tokenised financial ecosystem. He elucidated preliminary insights gleaned from the pilot, emphasizing its potential to revolutionize financial transactions while ensuring safety and efficiency.
However, amidst the optimism surrounding wholesale CBDC, Mr. Jordan posed pertinent questions that warrant further deliberation. He emphasized the importance of timing in central banks’ involvement in settling tokenised assets and delineated alternative solutions that merit evaluation. Moreover, he underscored the necessity of defining key parameters and governance arrangements for the effective implementation of wholesale CBDC.
Addressing retail payments, Mr. Jordan highlighted the SNB’s efforts to enhance the role of central bank money through upgraded payment systems, enabling instant payments and fostering competition and innovation. While acknowledging the potential of retail CBDC, he cautioned against its adoption in Switzerland, citing potential risks that outweigh its benefits.
In conclusion, Mr. Jordan reiterated the imperative of maintaining central bank money as the cornerstone of the monetary system amid technological advancements. He welcomed diverse perspectives on the future monetary landscape and expressed gratitude to panelists for their contributions.
In light of Mr. Jordan’s comprehensive remarks, it becomes evident that the prevailing narrative depicting the SNB as opposed to CBDC adoption lacks nuance and accuracy. Rather, Mr. Jordan’s discourse underscores the SNB’s proactive engagement in exploring innovative solutions while prioritizing stability and efficiency in the monetary system. As discussions on the future monetary system continue, it is essential to contextualize Mr. Jordan’s remarks accurately and foster informed dialogue on the potential of CBDC adoption.
Reference: https://www.bis.org/review/r240409b.htm
