Recently, Swiss National Bank (SNB) President Martin Schlegel rejected the idea of holding bitcoin in the bank’s reserves, as suggested by a public initiative. He stated that cryptocurrencies have several issues as an asset class, in an interview with the Tamedia newspaper group.
Why Cryptocurrencies Don’t Fit the SNB
Swiss National Bank (SNB) President Martin Schlegel explained why cryptocurrencies do not fulfill the essential characteristics that a good currency should have in an interview with a media group.
He highlighted three main reasons: first, cryptocurrencies are highly volatile, which makes them unreliable for maintaining long-term value. Second, he remarked that SNB reserves need to be highly liquid, allowing for quick use in monetary policy if needed. Lastly, Schlegel pointed out that cryptocurrencies have security flaws, as they are based on software, which can have bugs and vulnerabilities.
SNB In Competition With Crypto?
Furthermore, Schlegel argues that the SNB’s role is not to offer cryptocurrencies, noting that the total market value of all cryptocurrencies, around CHF 2,000 billion, is still small compared to the global financial system. He described cryptocurrencies as a “niche phenomenon.”
When asked about competition from crypto, Schlegel stated that currencies have always competed with each other. However, he emphasized that the Swiss franc is in high demand and that the SNB is not really worried about competition from cryptocurrencies.
The Bitcoin Initiative
However, a proposal launched last December aims to make the Swiss National Bank (SNB) invest in bitcoin. The group behind the “Bitcoin Initiative” has 18 months to collect 100,000 signatures to bring it to a public vote. The plan suggests the SNB should build its currency reserves with earnings, including gold and bitcoin, although it doesn’t say how much bitcoin should be held. The initiative is backed by Yves Bennaïm, an internet pioneer, and other Swiss crypto advocates, whose main goal is to spark a public debate.
