SNB Plans New Banknotes Despite Dwindling Demand for Cash

(Bloomberg) — The Swiss National Bank unveiled plans for a new series of banknotes even as the appetite for physical money fades in Europe’s most cash-savvy economy.

The new bills will be introduced at the beginning of the 2030s at the earliest, the SNB said on Wednesday. The theme of the banknotes will be “Switzerland and its altitudes,” with each of the six notes dedicated to a different Swiss region from valleys to mountains.

The central bank will kick off a design competition for the bills and will allow twelve artists to present drafts by July of next year, it said. The winner will be announced in 2026.

“We are convinced that cash will remain a widely used means of payment in the future,” President Martin Schlegel told reporters in Bern, adding that more than 90% of people in Switzerland say they want to keep physical money.

The current series of Swiss banknotes was emitted between 2016 and 2019. In August, some 72 billion francs ($83 billion) were circulating in bills, according to SNB figures. Almost half of the value was held in 1,000-franc notes.

In planning the new series, there was no discussion on changing the current denominations or abolishing the largest bill, Schlegel said. 

Keeping the note — which is equivalent to about $1,150 and among the most valuable single bills in the world — highlights a different approach of the SNB compared to the European Central Bank. In the euro area, even the 500-euro banknote was discontinued.

“The 1,000-franc bill is still needed, as people use it as store of value, but also as means of payment,” he said. “The population is satisfied with the existing denominations. We don’t see a reason to change it.”

Schlegel also said that while the SNB had negative interest rates, holdings of 1,000-franc bills increased. Since then, they dropped again.

Cash is an emotive issue in Switzerland, where every inhabitant holds the equivalent of $10,481 in bills and coins, the most of any European nation for which the Bank for International Settlements collates data.

Still — as in other advanced economies — the popularity of banknotes is declining. The SNB’s most recent survey in 2022 revealed that 36% of consumer transactions were settled in physical money. That’s even less than in 2020, when the pandemic discouraged the use of bills and coins.

Meanwhile, payment apps are surging and public transport operators have said that they plan to accept less cash in the future — citing handling costs as the main reason.

Regardless of this, the Swiss government has recently announced its support for a popular initiative seeking to enshrine the existence of physical money in the constitution. Unless the campaigners of a right-wing group withdraw their proposal, a vote on this will be held in the coming years.

The SNB maintains that it remains agnostic to the means of payment citizens want to use. Still, the central bank has last year convened an expert group with the government and the private sector to identify problems of cash supply if they arise.

On Wednesday, Schlegel reiterated earlier statements that the availability of physical money is also determined by how widely it is used.

“It’s about preventing a vicious circle: If the population wants to keep the current availability of cash, then it has to keep using cash,” he said.

While the SNB is among European leaders in pioneering tokenized payments between banks, officials have highlighted that they don’t see much use in a digital franc for consumers.

(Updates with more details from fourth paragraph.)

©2024 Bloomberg L.P.