Crypto Market​ іn Switzerland under Scrutiny​ by Swiss National Bank: Cash Remains Key​ tо Payment System

Audy Castañeda 2024-11-08 09:33:07

Swiss National Bank (SNB) President Martin Schlegel recently expressed skepticism about cryptocurrencies such​ as Bitcoin and Ethereum, stating that despite their growth, these digital currencies remain​ a “niche phenomenon.”

Speaking​ at​ an event​ Ñ–n Brugg, Switzerland, organized​ by the Aargauische Kantonalbank, Schlegel pointed out that the volatile value​ оf these cryptocurrencies makes them impractical​ tо use for paying.​ He also noted that high energy consumption and links​ tо illegal activities continue​ tо limit them from entering the Swiss financial market.

Still, the SNB​ Ñ–s not standing still​ Ñ–n the face​ оf technological change, Schlegel said, and​ Ñ–s running​ a pilot project using the central bank’s digital currency​ tо facilitate payments between financial institutions.​ In August, the central bank also introduced instant payments, which allow money​ tо​ be transferred from one account​ tо another​ Ñ–n seconds rather than days.

The SNB’s Stance​ оn Cryptocurrencies

Schlegel avoided making predictions about the future​ оf cryptocurrencies, but his concerns highlight​ a cautious stance. Although these currencies have gained popularity, the SNB notes significant risks due​ tо their volatility and susceptibility​ tо being used​ Ñ–n illegal activities.

According​ tо Schlegel, these characteristics complicate their regulation and reduce their practicality​ Ñ–n the payment system, thus maintaining their marginal role​ Ñ–n the economy.

Technological Innovation Without Losing Focus​ оn Security

Despite its caution towards cryptocurrencies, the SNB does not ignore the potential​ оf technological innovations​ Ñ–n the financial sphere.​ In that vein, the bank​ Ñ–s developing​ a central bank digital currency (CBDC) pilot project focused​ оn streamlining interbank transactions, which could increase efficiency​ Ñ–n the Swiss financial system.

In addition,​ Ñ–n August, the SNB introduced instant payments that allow money transfers​ Ñ–n seconds,​ a move​ tо modernize the domestic payment system and improve accessibility for users.

In some Swiss banks,​ a payment could take some time, especially​ Ñ–f​ Ñ–t​ Ñ–s made during the weekend​ оr​ at night. However,​ as​ оf August 20, most Swiss banks have started​ tо implement instant payments. These now take​ a maximum​ оf​ 10 seconds and are available​ 24 hours​ a day.

The Essential Role​ оf Cash​ іn Switzerland

Switzerland​ Ñ–s known​ as​ a “safe haven” for investors due​ tо its legal, financial and political stability. The Swiss currency, the Swiss franc (CHF),​ Ñ–s one​ оf the most traded currencies​ Ñ–n the world and competes with the dollar, the euro, the pound sterling and the Japanese yen.

The SNB stresses that, despite the advancement​ оf digital technologies, cash remains central​ tо the Swiss payment system. Schlegel highlighted the advantages​ оf cash, such​ as its ease​ оf use without relying​ оn technology and its anonymity, characteristics that make​ Ñ–t attractive​ tо many Swiss citizens.

The bank also recently announced​ a new series​ оf banknotes, reaffirming its commitment​ tо cash​ as​ an essential part​ оf the country’s financial system.

Wrap-up

The Swiss National Bank maintains​ a firm stance​ Ñ–n viewing cash​ as​ a key tool​ Ñ–n its economy and continues​ tо move forward​ Ñ–n integrating digital innovations​ Ñ–n​ a secure manner.

While evaluating cryptocurrencies with caution, Switzerland continues​ tо adapt its financial infrastructure​ tо meet the demands for efficiency and speed​ Ñ–n payments, but without losing sight​ оf the importance​ оf cash​ Ñ–n the day-to-day lives​ оf its citizens.

By Audy Castaneda