The Swiss National Bank (SNB) remains cautious about the role of cryptocurrencies like Bitcoin and Ether in the economy, emphasizing that physical cash will continue to play a significant role in Switzerland’s payment system, Reuters reported.
During an event organized by the Aargauische Kantonalbank in Brugg, SNB Chairman Martin Schlegel acknowledged the rapid growth of digital currencies but maintained that they remain a “niche phenomenon.”
Why did the Switzerland National Bank Chief Expressed Caution on Crypto?
“Bitcoin and other virtual currencies have exploded in the past few years,” Schlegel said but added that their volatility makes many of them a poor fit for everyday payments. In addition, Schlegel highlighted issues with the energy use of cryptocurrencies and association with illegal activities that he said present difficulties for regulating these digital assets.
Speaking with reporters after the announcement, Schlegel did not speculate about what direction cryptocurrencies might take in the future, but he said that the SNB was forward-thinking by reciprocal evolution within this sector against rapid structural developments.
For example, the SNB launched a central bank digital currency (CBDC) pilot project that aims to enable interbank payments. In August, the Swiss central bank also started making instant payments available, permitting immediate commands for transferring money between accounts, indicative of curbing monetary operations.
SNB Reaffirms Cash’s Role in Future Payments
On the other hand, Schlegel said that SNB’s position remains unchanged regarding the long-term worth of cash currency against cashless payment, highlighting the unique advantages cash provides in this period of digitalization.
Cash doesn’t need their technology. “How do you make it anonymous, for example, to just pay with a banknote,” Schlegel said. Speaking of cash, the SNB reiterated its cash view today by announcing that it still intends to introduce a new series of banknotes soon.
Interestingly, former SNB Chairman Thomas Jordan also expressed similar scepticism regarding public CBDC in Switzerland because of potential risks.
Switzerland in the Blockchain Sector
However, that’s not the case with blockchain innovation in Switzerland. In a significant development, UBS, the Swiss banking giant announced that it has officially completed its blockchain-mediated payment system through which it can transfer money directly to others using something called UBS Digital Cash.
Financial technology is evolving and meanwhile, the SNB and Swiss financial institutions are taking a measured path, investigating the potentials of blockchain and digital currency in backward-compatible use cases but treating traditional cash as still relevant within reasonable spheres of everyday life.
There is a certain balance here, and Schlegel’s message reflects the careful approach toward financial stability that Switzerland has long upheld as it engages carefully with technology.