Project Helvetia: The Swiss National Bank's Wholesale CBDC Experiment on DLT
Project Helvetia stands as one of the most consequential central banking experiments of the past decade. Conducted jointly by the Swiss National Bank (SNB), the Bank for International Settlements Innovation Hub (BISIH), and SIX Group, the project explored the feasibility and implications of settling tokenised securities in wholesale central bank digital currency (wCBDC) on a distributed ledger. The results have shaped the SNB’s approach to digital money and established a blueprint that central banks worldwide are studying and adapting.
Genesis and Objectives
The motivation for Project Helvetia arose from a fundamental question in the design of DLT-based financial market infrastructure: how should the cash leg of securities transactions be settled? Traditional securities settlement relies on central bank money — the safest form of money available — processed through real-time gross settlement (RTGS) systems like Switzerland’s Swiss Interbank Clearing (SIC) system. As SDX introduced DLT-based securities settlement, the question of whether and how central bank money could be made available on the same ledger became pressing.
The project was structured in two phases. Phase I, completed in December 2020, served as a proof of concept, examining the technical feasibility of issuing tokenised central bank money on a DLT platform and using it for the settlement of tokenised assets. Phase II, completed in January 2022, moved beyond technical feasibility to explore the practical, legal, and policy implications of integrating wCBDC with existing financial market infrastructure.
The objectives were deliberately ambitious. The project sought to determine whether wholesale CBDC could be issued on a DLT platform without compromising monetary policy implementation or financial stability; whether the legal framework for central bank money could accommodate a DLT-based form; whether the integration with existing payment systems would be operationally feasible; and whether the benefits of DLT-based settlement in central bank money justified the costs and risks.
Phase I: Proof of Concept
Phase I explored two approaches to providing a risk-free settlement asset on the SDX platform. The first approach involved the issuance of a wCBDC token directly on the SDX ledger, creating a new form of central bank money native to the DLT environment. The second approach involved linking the SDX ledger with the existing SIC payment system, enabling settlement in conventional central bank money while preserving the DLT-based processing of the securities leg.
The wCBDC approach required the SNB to issue Swiss franc-denominated tokens on the SDX ledger, backed one-for-one by reserves held at the central bank. These tokens would be available to authorised financial institutions for the settlement of DLT securities transactions, and could be converted back to conventional central bank money through the SIC system. The technical implementation demonstrated that a wCBDC could be integrated into the SDX settlement process, enabling atomic delivery-versus-payment settlement of tokenised securities against tokenised central bank money.
The link-based approach maintained the existing form of central bank money but created a bridge between the SIC system and the SDX ledger. When a securities transaction settled on SDX, the cash leg would be processed through the SIC system, with a synchronisation mechanism ensuring that the securities and cash transfers occurred simultaneously. This approach was less disruptive to the existing monetary framework but introduced operational complexity at the interface between the two systems.
Phase I concluded that both approaches were technically feasible and that neither posed insurmountable challenges to monetary policy implementation. However, the wCBDC approach offered superior integration with the DLT-based settlement model, enabling true atomic settlement without the latency and reconciliation issues inherent in the link-based approach.
Phase II: From Laboratory to Production
Phase II elevated the project from a controlled experiment to a near-production pilot, conducted on the SDX platform with live transactions. The phase explored the operational implications of integrating wCBDC with financial market infrastructure, including the impact on the SNB’s balance sheet, the legal treatment of tokenised central bank money, and the governance arrangements required for ongoing operation.
A critical finding of Phase II was that wCBDC issuance on a DLT platform did not fundamentally alter the monetary policy framework. The tokenised Swiss francs issued on the SDX ledger represented a new form of existing central bank money rather than a new type of money. The SNB’s balance sheet expanded by the amount of wCBDC issued, with a corresponding liability to the holders of the tokenised francs. The withdrawal of wCBDC — through conversion back to conventional reserves via the SIC system — reversed this balance sheet expansion. The elastic supply mechanism ensured that wCBDC did not create additional liquidity in the financial system beyond what the SNB intended.
The legal analysis confirmed that tokenised central bank money could be accommodated within the existing legal framework for central bank operations. The National Bank Act grants the SNB broad authority over the instruments and operational modalities of monetary policy, providing sufficient flexibility to issue money in tokenised form without legislative amendment. However, the registration agreement governing the wCBDC tokens required careful drafting to ensure that the legal attributes of central bank money — including its status as legal tender and its treatment in insolvency — were preserved in the DLT context.
Policy Implications
Project Helvetia yielded several policy insights that continue to inform the SNB’s approach to digital money and DLT-based financial infrastructure.
First, the project demonstrated that the provision of central bank money for DLT-based settlement is both technically feasible and operationally manageable. This finding is significant because it removes a potential barrier to institutional adoption of DLT-based securities infrastructure. If tokenised securities could only be settled in commercial bank money or stablecoins, the credit risk associated with the settlement asset would be a material deterrent for institutional participants. The availability of risk-free central bank money for DLT settlement addresses this concern.
Second, the project revealed the importance of design choices regarding the distribution and access arrangements for wCBDC. The SNB concluded that access to wCBDC should be restricted to institutions that already have access to central bank money — primarily banks and securities dealers — rather than being made available to the general public. This wholesale-only design preserves the existing monetary architecture, in which commercial banks serve as intermediaries between the central bank and the broader economy.
Third, the project highlighted the need for international coordination in the development of wCBDC for cross-border settlement. Tokenised securities markets are inherently international, and the settlement of cross-border transactions in central bank money requires interoperability between multiple wCBDC systems. Project Jura, a subsequent initiative involving the SNB, the Banque de France, and the BIS Innovation Hub, addressed this cross-border dimension directly.
For further analysis of cross-border wCBDC settlement, see our coverage of Project Jura.
Lessons for Other Central Banks
Project Helvetia has served as a reference model for central banks exploring wholesale CBDC. The European Central Bank, the Bank of England, the Bank of Japan, and numerous other central banks have cited the project’s findings in their own CBDC research programmes. The project’s emphasis on practical experimentation within a production-like environment, rather than purely theoretical analysis, has been particularly influential.
Several lessons from Helvetia have broad applicability. The importance of collaborating with market infrastructure operators — rather than building central bank DLT systems in isolation — was a key takeaway. The SNB’s partnership with SIX Group ensured that the wCBDC design was aligned with the practical requirements of securities settlement, avoiding the risk of developing a theoretical solution that did not meet market needs.
The graduated approach — moving from proof of concept to near-production pilot — provided a model for managing the risks associated with central bank innovation. Each phase built on the findings of its predecessor, with clear decision points at which the project could be adjusted, expanded, or discontinued based on the evidence gathered.
The project also demonstrated the importance of engaging with legal, regulatory, and governance questions alongside technical development. A wCBDC that is technically functional but legally uncertain or operationally ungoverned would not be fit for deployment in a systemically important context. Project Helvetia’s integrated approach to these dimensions has become a best practice for central bank innovation projects.
From Pilot to Permanent Infrastructure
The transition from Project Helvetia as a time-limited experiment to the potential permanent provision of wCBDC for DLT-based settlement is the key question facing the SNB. The pilot demonstrated that the provision of wCBDC is feasible and desirable, but the decision to make it a permanent feature of the Swiss monetary infrastructure involves considerations that go beyond technical feasibility.
The SNB must assess the systemic implications of permanent wCBDC provision, including the impact on the demand for central bank reserves, the effect on the interbank money market, and the operational burden of maintaining a DLT-based money issuance capability alongside the existing SIC system. The governance arrangements for a permanent wCBDC facility — including the terms of access, the pricing of wCBDC services, and the allocation of operational responsibilities between the SNB and the market infrastructure operator — must be defined with the rigour appropriate to a systemically important service.
The international dimension adds further complexity. If the SNB provides permanent wCBDC for domestic DLT settlement, foreign central banks may seek reciprocal arrangements, leading to a network of interoperable wCBDC systems. While this development would be beneficial for cross-border settlement efficiency, it raises questions about currency sovereignty, capital flows, and the coordination of monetary policy across jurisdictions.
Switzerland’s experience with Project Helvetia positions it at the forefront of central bank engagement with DLT-based financial infrastructure. The project’s findings provide a foundation for the next phase of institutional development, in which the experimental infrastructure is hardened, scaled, and integrated into the permanent fabric of the Swiss financial system.
Donovan Vanderbilt is a contributing editor at ZUG DLT, covering distributed ledger technology law, regulation, and institutional adoption from Zurich. The Vanderbilt Portfolio AG provides research and analysis on Swiss digital asset infrastructure.