Swiss central bank chief rejects holding bitcoin in reserves

SNB President Martin Schlegel says cryptocurrencies are still a "niche phenomenon". Keystone-SDA

Swiss National Bank (SNB) President Martin Schlegel rejects the idea that the central bank should hold part of its reserves in bitcoin, as proposed by a people's initiative. Cryptocurrencies present several problems as an asset class, he told the Tamedia newspaper group.

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Cryptocurrencies do not fulfill the essential characteristics that a good currency should have, Schlegel told the media group in an interview published on Saturday.

Firstly, cryptocurrencies are extremely volatile, he said, which is not conducive to maintaining the value of SNB investments in the long term. “Second, our reserves need to be highly liquid so that they can be used quickly for monetary policy purposes if needed,” said Schlegel.

Third, cryptocurrencies display security weaknesses. They are essentially software, “and we all know that software can have bugs and other weak points”, said the SNB president.

‘Niche phenomenon’

Schlegel argues that the SNB’s role is not to offer cryptocurrencies. He points out that compared to the global financial system as a whole, the market capitalisation of all cryptocurrencies – at around CHF2,000 billion – is relatively small. “So we’re still talking about a niche phenomenon,” said the SNB president.

Currencies have always been in competition with each other, said Schlegel when asked whether the SNB, as guardian of the Swiss franc, was afraid of competition. The franc seems more coveted than ever, he said, “We’re not afraid of competition from crypto-currencies.”

An initiative to launch the debate

An initiative launched last December aims to oblige the SNB to invest in bitcoin. The committee for the proposal, entitled “For a financially strong, sovereign and responsible Switzerland (Bitcoin Initiative)” have 18 months to collect the 100,000 signatures necessary for it to be put to a public vote.

The initiative calls for a change to the constitution stating that the SNB should build up currency reserves from its earnings, part of which should be held in gold and bitcoin. The text does not specify how much bitcoin should be held.

The initiative is backed by a group led by internet pioneer and author Yves Bennaïm from French-speaking Switzerland, as well as a number of Swiss cryptocurrency advocates. The primary aim is to initiate a debate, Bennaïm told the NZZ am Sonntag newspaper in spring.

What is your opinion? Join the debate:

Adapted from French by DeepL/sb

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