The Deposit Token: SBA white paper on a digital Swiss franc

As the digital transformation sweeps through the economy and society at large, it requires support from efficient, widely accepted and secure means of payment. How can banks best support this development? That question lies at the heart of the current work by the Swiss Bankers Association (SBA) on the concept of a digital Swiss franc. In a white paper written jointly with experts from its member institutions and academia, it presents the idea of a “deposit token” (DT).

The basic concept of the DT is derived from the “tokenisation” of deposits based on public blockchain technology. The DT is “programmable money”, i.e. a purely digital form of the Swiss franc that can be enhanced with programmable functions. The main use cases include the trading and settlement of digital assets, payments in the context of the “Economy 4.0” (including payments executed among machines within the Internet of Things), and decentralised finance applications. Given the DT’s character as a platform technology and a public good, further innovative areas of application are likely to emerge over time.

Ensuring the DT’s stability is crucial for its acceptance and widespread use. Commercial banks already provide their clients with a crucial and proven instrument for value creation, namely deposits. If this fundamental service is to be provided in the financial system of the future, a digital Swiss franc must resemble conventional deposits from an economic perspective as closely as possible. Since programmable tokens bear the hallmark of the issuing party, it is essential to ensure that different tokens can be exchanged for each other without complications and always be converted into conventional deposits at the same value. The white paper discusses three main variants of DT that can meet these requirements.

The paper concludes that the DT can be a viable means of ensuring the financial centre’s competitiveness and strengthening the digital economy and its innovative power going forward, while also safeguarding Switzerland’s economic and technological sovereignty. In addition, advantages for private households and companies stem from the availability, usability, reliability and security of payments.

Feasibility studies are now needed to drive the DT concept forward. To this end, a dialogue must take place with the relevant authorities to bindingly resolve legal and regulatory issues. The SBA and its members are committed to obtaining this needed clarification and to continuing their joint work on the DT.