new, dlt - based form of money. like book money, it can be issued by both private issuers and the central bank. in the latter case, it is referred to as a central bank digital currency – cbdc for short. depending on the user, a distinction can be made between retail cbdc and wholesale cbdc. wholesale cbdc would correspond to a tokenised form of sight deposits held by commercial banks at the central bank. retail cbdc, on the other hand, would be available to the general public ; it would essentially be tokenised cash. examples of private token money are tokenised account balances at commercial banks, and stablecoins. tokenised account balances at commercial banks correspond to account balances in the form of book money, except that these account balances are made available in the form of tokens on a distributed ledger. tokenised account balances allow end users to exploit the potential of dlt. private token money promises parity with book money by allowing tokenised money to be converted into book money at par value at any time. like today ’ s account balances at commercial banks, tokenised account balances at commercial banks do not necessarily have page 8 / 11 to be backed one - to - one with high - quality liquid assets at all times. stablecoins, as a rule, are collateralised. 6 payment settlement of token transactions another important question is how exactly should transactions be settled. there are two options ( cf. slide 9 ). the first is integrated settlement, where both money and other assets exist in tokenised form on the same dlt infrastructure. this integration allows for the secure and efficient atomic settlement we talked about earlier. technically, such integrated settlement would be possible with both private token money and cbdc. the second is synchronised settlement, where the cash leg of the transaction is not represented on the ledger but is synchronised with it. both private book money and central bank book money can be used as the means of payment here. for transaction settlement, the transfer of tokenised assets on a dlt infrastructure is synchronised with the transfer of money in conventional payment systems. here, too, money and goods can be exchanged simultaneously on a dvp basis, but the challenge lies in coordinating processes across different infrastructures, each with a different underlying technology. traditional financial market infrastructures use the synchronised settlement model for settling securities transactions, for example by coordinating the rt

philipp m hildebrand : economic outlook and monetary policy speech by mr philipp m hildebrand, member of the governing board of the swiss national bank, aperitif marche monetaire, geneva, 17 november 2005. the complete speech can be found in french on the swiss national bank ’ s website ( www. snb. ch ). * * * the swiss economy has benefited from a favourable international environment. activity has remained strong in the us, whereas it has improved in japan and, more recently, in europe. in switzerland also, the latest indicators point towards stronger growth. exports remain the engine of the recovery but private consumption has also picked up. however, consumer confidence remains fragile in the context of only modestly improving labour market conditions. the snb expects the economic recovery to continue. a sudden adjustment of the us current account imbalance or a further increase of energy prices are predominant risks. from a monetary point of view, the current situation is characterised by different counteracting forces. on the one hand, the economic outlook is positive. on the other hand, some risks put this favourable picture into perspective. furthermore, the increase of energy prices might endanger medium term price stability at a time when monetary conditions remain expansive. last but not least, globalisation continues to hold down the prices of many goods. in this complex environment, it is important that central banks succeed in preserving their most important monetary asset, namely well anchored inflation expectations. in switzerland, this means that as long as the economic recovery remains on track, we should not postpone for too long the process of normalising monetary conditions. otherwise, we would put medium term price stability at risk. 1 / 1