The Swiss National Bank (SNB) has announced a two-year extension for the pilot program of its central bank digital currency (CBDC), dubbed the "digital franc." Initially set for June 30, the pilot is now expected to launch in 2026. This extension will allow for the integration of more financial institutions and the evaluation of the digital franc's performance in real-world scenarios.

Unlike CBDC pilots in countries like China, the SNB's pilot is focused on wholesale applications between financial institutions, rather than retail use by the general public. The pilot currently involves six commercial banks and Swiss stock exchange provider SIX, with the goal of expanding the range of financial transactions that can be conducted using the digital franc.

While the digital franc has shown promise in its testing, including the settlement of five bond issuances on SIX's digital exchange, the SNB has emphasized that the extension does not guarantee the permanent introduction of the digital franc.

The Bank for International Settlements (BIS) has been a key player in the development of CBDCs, with its Innovation Hub driving research and development in digital currencies and financial technology innovation. The BIS has collaborated with the SNB and other central banks on several projects, including Project Jura, which focuses on wholesale CBDCs for cross-border settlements, and Project mBridge, a multi-CBDC common platform for wholesale cross-border payments.

The extension of the SNB's CBDC pilot highlights the ongoing efforts of central banks to explore the potential of digital currencies in improving the efficiency and security of financial transactions. As the development of CBDCs continues to advance, it is likely that we will see further collaborations and innovations in the space.