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UBS Group AG’s rescue of Credit Suisse in March 2023 propelled Switzerland’s banking sector towards the issuance of tokenized bonds settled in the country’s experimental digital currency, marking a significant milestone in the industry’s evolution.
In March 2023, UBS Group AG rescued Credit Suisse, marking a pivotal moment for Switzerland’s banking industry. This event spurred Swiss bankers and officials to develop new financial infrastructures, resulting in the issuance of tokenized bonds settled in the country’s experimental digital currency. The Zurich and Basel cantons were the first to issue these bonds, followed by Lugano shortly after.
The Swiss National Bank described the initiative as “very successful” and has extended the pilot program by two years. Unlike other financial hubs, Switzerland’s blockchain-based system is notably advanced. The central aim of tokenization is to simplify and secure asset transactions by representing them as digital tokens on a blockchain.
Switzerland’s SIX Digital Exchange, launched in 2021, is the world’s first fully regulated venue for trading digital bonds and stocks. In June 2023, a 200 million franc bond by the World Bank was settled via this digital platform, showcasing Switzerland’s progress in integrating tokenized bond issuance and trading.
Despite this progress, challenges remain, such as persuading rating agencies like Moody’s to treat tokenized bonds with the same credibility as traditional ones. Nevertheless, Switzerland’s initiatives have positioned it as a leader in financial innovation, although global competition remains intense.
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