Cryptofranc to bring no additional benefits to Switzerland, Federal Council warns

Maria Nikolova

Universally accessible central bank digital currency would give rise to new risks, especially with regard to financial stability, Switzerland’s Federal Council says.

During its meeting held today, Switzerland’s Federal Council approved a report examining the opportunities and risks of introducing a cryptofranc (e-franc). The Council concludes that universally accessible central bank digital currency would bring no additional benefits for Switzerland at present. Instead, it would give rise to new risks, especially with regard to financial stability.

The Wermuth postulate (18.3159), which was adopted by the National Council, had requested the Federal Council to examine the opportunities and risks of introducing a cryptofranc. The Federal Council had recommended that the postulate be adopted, as it has noted the increased interest in cryptocurrencies, digital payment systems and digital central bank currency. In a report published today, it has addressed the main questions relating to central bank digital currency.

The analysis conducted for this report shows that the introduction of a central bank digital currency will result in repercussions that can be far-reaching depending on the design, and that there are better solutions for most of the areas considered. The Federal Council therefore believes that universally accessible central bank digital currency would not bring any additional benefits at the moment. The Swiss National Bank (SNB) shares this view and sees the newly arising risks to monetary policy and financial stability, in particular, as a major challenge.

With regard to increasing the efficiency and security of cashless payment transactions, central bank digital currency conveys no advantages in Switzerland. The existing system is efficient and secure, and is also being refined continuously. There is room for improvement in the area of cross-border payments. However, the introduction of cryptofranc would not solve this problem. It would be preferable to improve interoperability between the existing systems and coordination between the parties involved.

In terms of the SNB’s monetary policy, the verdict on universal accessibility to central bank digital currency would be negative, as it would bring new risks rather than discernible benefits, the Council says. Such currency would not increase the leeway in terms of monetary policy. On the contrary, it would carry the considerable risk that – depending on the design – greater foreign demand for Swiss central bank digital currency could put the Swiss franc under heightened upward pressure, especially in times of crisis.

With regard to financial stability, the overall impact is rather negative. Relative to today, central bank digital currency would be likely to increase the risk of bank runs, even though it could have a disciplinary effect on the banking sector as an alternative investment.

As things currently stand, the further development of central bank digital currency that is restricted to financial market players would appear to be a more promising strategy. This would not have the same far-reaching and fundamental implications as universally accessible central bank digital currency.

The Federal Council and the SNB will continue to monitor developments in this area closely.

Read this next


BlockDAG Transforms Crypto Mining with X1 Beta App Launch, Raises $49.2M in Presale; SEI & BONK Developments

Uncover BlockDAG’s X1 app beta launch, reshaping mobile mining and propelling its presale to $49.2M, eclipsing BONK and SEI.

Digital Assets

Joe Biden’s campaign explores crypto donations via Coinbase

U.S. President Joe Biden’s campaign is in discussions with cryptocurrency industry players about accepting crypto donations through Coinbase Commerce, sources familiar with the matter told The Block.


VGX Foundation and Honeyland Partner to Offer VGX Rewards for Players

The VGX Foundation has announced a partnership with popular web3 game Honeyland, offering rewards utilizing the VGX token for their players.

Digital Assets

Terraform and Do Kwon fined $4.5 billion to settle with SEC

Terraform Labs and its co-founder Do Kwon have reached a final settlement with the U.S. Securities and Exchange Commission (SEC) regarding a fraud case, according to a court filing on Wednesday.

Retail FX

Dukascopy broadens CFD offering with Italian stocks

Switzerland’s forex bank and broker, Dukascopy has just expanded its offering to include Italian stocks and the Italy 40 Index. The new additions allow clients to access a broader range of investment opportunities in the Italian market.

Fundamental Analysis, Market News, Tech and Fundamental

Global FX Market Summary: Federal Reserve Monetary Policy, US Inflation,Eurozone June 12 ,2024

The Fed meets today to decide on interest rates. A dovish shift (keeping rates steady or hinting at cuts) is expected, weakening the US dollar and potentially boosting gold prices.


BlockDAG Leads CoinSniper Ranking as Presale Surges to $49.2M While Cardano Shows Resilience & ApeCoin Surges

Explore BlockDAG’s #1 ranking on CoinSniper listing as presale booms to $49.2M. More on ADA’s resilience & ApeCoin’s surge.

Market News, Tech and Fundamental, Technical Analysis

Gold Technical Analysis Report 12 June, 2024

Gold can be expected to rise further toward the next resistance level 2385.00, which stopped the previous minor correction B at the start of June.