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Swiss National Bank Rejected Holding Bitcoin in Reserves
Swiss National Bank (SNB) President Martin Schlegel has rejected the idea of holding bitcoin as part of Switzerland’s central bank reserves, citing a lack of stability, liquidity, and security.
According to local media, Schlegel expressed three primary concerns surrounding cryptocurrencies. The first is their volatility, which he believes makes them unsuitable for long-term value preservation.
Stability and Volatility
“Our reserves need to be highly liquid so that they can be used quickly for monetary policy purposes if needed,” Schlegel explained, pointing to a lack of stability inherent in being software-based assets. “We all know that software can have bugs and other weak points.”
Liquidity and Security
The Swiss National Bank President’s words come amid a growing debate in Switzerland over the nascent asset class. A recent initiative is pushing for a constitutional amendment requiring the SNB to hold bitcoin in its reserves alongside gold, the article said.
Initiative to Hold Bitcoin in Reserves
The initiative, launched in December, led by entrepreneur Yves Bennaim, does not go into details when it comes to the bitcoin allocations but specifies it should be built up from the bank’s earnings. It has 18 months to collect 100,000 signatures in a bid to trigger a nationwide vote on the topic.
Switzerland’s Growing Acceptance of Cryptocurrencies
Despite Switzerland’s growing acceptance of cryptocurrencies, with various Swiss banks offering customers cryptocurrency-related services, Schlegel dismissed the asset class as a “niche phenomenon.” Currencies, he told Tamedia, have already been in competition, and Schlegel maintained the bank is “not afraid of competition from cryptocurrencies,” citing the continued strength of the Swiss franc.
Frequently Asked Questions
Q: Why did the Swiss National Bank reject the idea of holding bitcoin in its reserves?
A: The bank’s president, Martin Schlegel, cited a lack of stability, liquidity, and security in his decision.
Q: What are the three primary concerns surrounding cryptocurrencies according to Schlegel?
A: The three concerns are their volatility, lack of liquidity, and security.
Q: What is the initiative to hold bitcoin in reserves?
A: The initiative, led by entrepreneur Yves Bennaim, aims to require the SNB to hold bitcoin in its reserves alongside gold, but it does not go into details on the bitcoin allocations.
Q: What is the timeline for the initiative to collect signatures and trigger a nationwide vote?
A: The initiative has 18 months to collect 100,000 signatures to trigger a nationwide vote.
Q: How does the Swiss National Bank view the growing acceptance of cryptocurrencies?
A: The bank’s president, Schlegel, dismissed cryptocurrencies as a "niche phenomenon," citing the continued strength of the Swiss franc.
