Switzerland remains cautious about the growing role of virtual currencies despite the surge in crypto prices in recent years, according to Swiss National Bank (SNB) Chairman Martin Schlegel. In comments made on November 7, Schlegel reaffirmed the SNB’s stance that physical cash will continue to play a central role in the country’s payment system.
While cryptocurrencies such as Bitcoin and Ethereum have seen substantial growth, Schlegel referred to them as “niche phenomena” and emphasized that their volatility limits their usefulness for everyday transactions. He stopped short of predicting the future trajectory of the crypto market in Switzerland but pointed out that the instability of digital assets makes them impractical for regular use in day-to-day exchanges.
Concerns Over Crypto’s Environmental Impact and Illicit Activity
In addition to volatility, Schlegel raised concerns about the environmental impact of cryptocurrencies, particularly the energy-intensive nature of mining. He also noted the connection between some cryptocurrencies and illicit activities, which complicates efforts to regulate the market effectively.
Despite these reservations, Schlegel stressed that the SNB is not dismissing technological advancements in the digital currency space. He highlighted a pilot project exploring the potential of a central bank digital currency (CBDC) to improve interbank payments, signaling the SNB’s openness to adopting new technologies where they offer clear benefits.
Switzerland’s Commitment to Cash and Caution Over CBDC
Although Switzerland is exploring the possibility of a state-run digital currency, Schlegel reiterated that the SNB remains committed to preserving cash as a vital part of the payment ecosystem. “Despite the digitalization of the electronic payment system, we believe that cash will play an important role in the future,” Schlegel said.
This cautious approach to digital currencies echoes comments made earlier this year by Thomas Jordan, the former Chairman of the SNB. In April 2024, Jordan stated that Switzerland is unlikely to introduce a public CBDC in the near future. He argued that the risks associated with CBDCs still outweigh the potential benefits, particularly since the private sector already offers many innovative and efficient payment solutions. Jordan also noted that a retail CBDC could significantly alter the current monetary system in ways that may not be desirable.
As Switzerland continues to evaluate the role of cryptocurrencies and digital currencies, the SNB remains focused on maintaining stability in the financial system while cautiously exploring technological innovation in the digital payments space.
