The first European wholesale central bank digital currency project has been successfully piloted and is expected to present a new concept for cross-border trade.

In cross-border commerce and contracts, some central banks have explored the digital currencies of wholesale central banks (sale of CBDCs, hereinafter “wCBDC”). Recently, the French Bank for International Trade and the Swiss National Bank jointly announced the completion of the wCBDC operation through cross-border payments called “Jura”.

According to a World Bank report on international trade, existing cross-border business processes are slow, expensive, difficult and potentially risky due to the large number of people involved in the middle and financial industry. As a result, the global financial system needs better and more comprehensive payment solutions and solutions to meet current and future needs.

In this context, the Jura project creates a third-party platform using the euro and the Swiss franc wCBDC and token financial instruments for cross-border payments. It opens up new possibilities for crossing the borders of currencies, security and other financial instruments.

Andréa Maechler, member of the steering committee of the Swiss National Bank, said that Switzerland, as a small open economy, needs good and robust cross-border payment and litigation procedures and that the Jura project uses collection tools. funds to generate cross-border financing. . from the future. Institutional payment method.

Take advantage of distributed ledger technology

The report indicates that the development of the Jura project is based on the experimental site of the Swiss Central Depository and the French unlisted commercial publication platform, and that the Corda platform should result in full use of the distributed data. Corda is supposed to be designed through an integrated peer-to-peer network of computer nodes. Although data is only shared between vendors, monitoring nodes can be split to display interchange data, helping to comply with legal and regulatory requirements.

During market validation, Corda uses a notary node to ensure uniqueness of transactions through signatures and time stamps. The notarial nodes for the euro and the Swiss franc wCBDC are regulated by the French and Swiss national banks respectively. And each exchange employee must identify themselves to know if the exchange complies with company rules.

Specifically, in November of this year, the Jura pilot project was launched and completed in just three days, with Natisys, UBS and Credit Suisse directly involved. The experimentation is done in a real environment, using real assets, and meeting the standards in force.

On the first day, the Société de commerce foreign de France announced the symbolic value of 200,000 euros ("NEU CP" in the image below) and the UBS payment in Euro wCBDC ("EUR" in the image below). below). On Wednesday, we exchanged wCBDCs to Swiss francs ("CHF" in the image below) and wCBDCs to euros at the Banque de France.

On the second day, Credit Suisse paid Euro wCBDC in foreign currency to purchase the aforementioned business letters held by UBS.

On the third day, Credit Suisse resold the French currency notes to earn euro wCBDC, and UBS and French Foreign Exchange finally converted the euro wCBDC to Swiss franc wCBDC. At this point, the holding of the trader's position has reverted to its original day of events.

Improving the efficiency of cross-border trade

Compared to modifying and changing home payment status, the digital currency central bank has been more successful in streamlining and reducing cross-border payments. The Bank for International Settlements notes that the average cost of private companies' $ 200 international remittances is typically 10% of the total exchange rate. Samples usually take a few days.

“The Jura project finalized a new solution for tokenized financial instruments and cross-border exchange. The above report shows how to create a platform for a wide range of assets and decisions, leveraging information technology and banking sharing. Critical cross-border management of money paved the way for central bank spending to cross the border. can open up and help improve the security and functioning of border crossings. and the integration of tokenized assets into a third-party platform that improves performance and provides more room for improving asset performance, accountability and trading.

At the same time, the report suggests that the Jura project can provide financial security in three ways. First, the expansion of digital banking can help reduce financial risk, and second, the emergence of tokenized financial ecosystems will make it more competitive, more diverse, and more job-creating through greater cross-border coverage. The wide use of -wCBDC simplifies revenue management and reduces cross-border costs by reducing the need for banks to deposit money in advance with foreign exchange banks.

At the same time, however, the report notes that Project Jura requires participants to conduct a thorough assessment of oversight, management and operations, and should. experiences. . Improve emergency procedures and improve monitoring. Also, since payment can only be made at the current payment level, the company registration still needs to be done, making the transition difficult to some extent. .

The statement added that once the Jura project completes the performance and sustainability of wCBDC across borders, it will be up to the bank to decide what to do. further explore the future of wCBDC in the future.