The chairman of the Swiss National Bank (SNB), Martin Schlegel, has emphatically rejected the idea of integrating Bitcoin into SNB’s currency reserves. Schlegel’s comments during the SNB shareholders’ assembly in Bern on 25 April 2023 highlight the central bank’s enduring skepticism toward cryptocurrencies as a meaningful part of their national assets.
Citing Liquidity and Volatility Issues
Schlegel, in his address, articulated the arguments supporting the bank’s position. He insisted that the bank’s currency reserves are based on policies that maximize asset conditions, which allow the swift purchase and sale of foreign exchange.
For the purposes of executing monetary policy, these assets must be easily traded: liquid. Schlegel noted that, contrary to this, cryptocurrencies are speculative by nature, laden with volatility: “very, very high” value fluctuations inhibit a currency’s ability to maintain the resilience and stability of the SNB’s reserves.
Global Interest in Bitcoin Reserves Contrasts SNB Caution
At the same time the SNB is firmly opposing the notion of Bitcoin reserves, governments across the globe have already started deliberating the possibility of establishing strategic reserves of Bitcoin. This shift in attitude demonstrates that countries are beginning to regard cryptocurrencies, and Bitcoin in particular, as potential assets for national reserves.
In the US, a noteworthy development occurred in March during which the government both seized Bitcoin in legal proceedings and used it to create a strategic reserve and established a more comprehensive reserve of digital assets. Other countries are reportedly looking into similar options.
Schlegel‘s Consistent Stance on Crypto
Schlegel‘s address was not the first instance in which he has held these views. He expressed a variant of them to Bloomberg Television last month when he told the interviewer the SNB is not acquiring any assets classified as crypto and emphasized there would be no plans to do so in the future. He explained why these foreign-exchange reserves will never hold crypto assets, stating the reserves will remain the tools of monetary policy.
Schlegel elaborated further, discussing what underlies this stance, pointing to the inability of digital currencies to fulfill crucial functions, in particular value preservation, which he explains is owing to extreme volatility. Further, he posed some of the questions surrounding crypto assets, stressing the fact that there is a lack of reliability of software cryptocurrencies as digital currencies are prone to bugs.
Referendum Challenge and the Future of Swiss Monetary Safeguards
The recent referendum proposal suggests constitutional amendments to the current structure of Switzerland’s monetary safeguards and is accompanied by cryptocurrency advocates pushing for these changes. As always, the SNB is pro-gold, but this time around, Bitcoin lovers want the central bank to accept Bitcoin as a reserve alongside gold. These initiatives bring to light the incongruity regarding visions of integrating digital currencies into national economies.
Conclusion: A Divide in Global Crypto Adoption
The position of the SNB clearly indicates the rest of the world’s attitude towards cryptocurrency usage in the national borders. Unlike countries that have started to make attempts, let alone devote time and resources, to have Bitcoin integrated into the economy, Switzerland staunchly refuses to abandon its traditional custodial view regarding the digital currencies, holding concerns of severe volatility and liquidity issues. All eyes are set on the results of the said referendum and the debate that precedes it, especially for the world that awaits the next big thing in finance after the COVID-19 pandemic.
