The Swiss government doesn't want the central bank to roll out an e-Swiss franc. The reticence contrasts sharply with keen interest in the alpine nation's burgeoning blockchain and cryptocurrency sector.
A potential e-Swiss franc project got rolling after Switzerland's central bank began working with the Bank for International Settlements in October, on a project restricted to the use within the financial community. Now, the Swiss National Bank and the government clarified that the introduction of an e-franc for the general public isn't a good thing, according to a statement from the finance department on Friday.
The Swiss government said an e-franc would bring more risks, especially to financial stability, that it would reap benefits. «The federal council, therefore, believes that universally accessible central bank digital currency would not bring any additional benefits at the moment,» the government said.
Central Bankers Tiptoeing
It was more receptive to a «wholesale»-style token for financial market participants to more easily trade, settle, and manage securities. A Swiss National Bank-backed utility coin «would not have the same far-reaching and fundamental implications as universally accessible central bank digital currency,» the government said.
The response comes from a postulate in parliament by lower-chamber politician Cédric Wermuth. The SNB has tiptoed around the subject of e-franc for months. The central banks of Sweden and China have said they plan to issue a digital version of their currency.
Fear of Franc Strength
The government report clarifies and details the SNB's position on digital currencies as well. The central bank argues that the e-franc risks becoming a haven currency for foreign speculators in crisis times – which would further strengthen the Swiss currency.
The SNB on Thursday bedded down in its years-long battle to keep the franc from rising above a level it views as fair. It combines a regime of negative interest rates – or charges on franc deposits – with regular interventions in foreign currency markets to keep the franc down.
Monitoring Technology
The Swiss government said it and the central bank will keep a close eye on digital currencies with a view to continually reviewing its stance. The statement comes one day after new European Central Bank head Christine Lagarde signaled receptiveness to digital currencies.
«Rapid technological developments, changing payment needs and the experience of other countries may lead to a reassessment of the opportunities and risks of central bank digital currency for the general public in the future.»
