Swiss Bankers Association proposes deposit tokens to develop digital economy
The Swiss Bankers Association released a white paper on how Swiss banks can support the development of the country’s digital economy. A Swiss franc “joint” deposit token is the solution the group settled on.
Stablecoins have limited penetration in the Swiss financial system, even as end-to-end digitization is becoming more common in business models, and no Swiss stablecoins are accessible by the general public, the paper said.
The authors of the paper suggested that a variety of stablecoin, that is, a deposit token “issued by regulated and adequately supervised intermediaries,” issued and redeemed by smart contracts and denominated in Swiss Francs. The token could be designed as a ledger-based security, rather than a set of instructions, to provide it with the greatest potential.
The paper identifies three design options for a deposit token. These are standardized tokens that any commercial bank can issue with a uniform standard, colored tokens that are issued by commercial banks to any standards they choose and joint tokens that are issued by a licensed and supervised special purpose vehicle consisting of participating banks. The authors prefer the last choice.
A joint deposit token would facilitate money creation due to its flexibility, have low fees and could earn interest when held in bank accounts. It would be less liable to runs than tokens issued by individual banks. Furthermore:
The token would ideally be a layer 2 solution usable in decentralized finance (DeFi) applications and capable of self-custody or bank custody.
The Swiss Bankers Association (SBA) has published a white paper on a digital Swiss franc, in which it outlines various designs of tokenised deposits on the blockchain https://t.co/SsPwziNRRm
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