The Swiss National Bank (SNB), central bank for Switzerland, and the Bank of International Settlements (BIS), which acts as a central bank for central banks around the world, are developing a digital currency to track settlement of transactions that involve assets which have been converted to tokens between financial institutions. In the initial stage, a proof of concept will be developed.

The project is one of the first two at the BIS Innovation Hub. The Hub, which became operational yesterday, is tasked with identifying technology and innovation trends that affect central banks and develop products to improve functioning of the global financial system. The hub’s second project will examine the rise in requirements for central banks to ensure sure smooth functioning of electronic markets around the world.

The BIS has previously been critical of cryptoassets and their value to society. In a March report, the organization stated that cryptoassets were unreliable and are unsafe as a medium of transaction or store of value. BIS Chief Agustin Carstens also likened cryptoassets to “parasites” in the financial ecosystem.   But he told the Financial Times in July that Central Bank-administered Digital Currencies (CBDC) might become a reality “sooner than we think”. The BIS has also consulted with Facebook’s Libra officials to research stablecoins, or coins whose value remains stable because it is pegged to a basket of goods or a fiat currency.