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Switzerland’s government has requested a report into the risks and opportunities of launching its own cryptocurrency, a so-called “e-franc” that would use technology similar to privately launched coins like bitcoin but have backing of the state on may 17.
The Federal Council moved to investigate the subject at the prompt of Swiss lawmaker and vice-president of the Social Democratic Party, Cedric Wermuth. Now, the lower house of the Swiss parliament has to decide whether to support the Federal Council’s request for research. Should the proposal be approved, the Swiss Finance Ministry will conduct a study on the subject. No time frame has been published regarding the process. The Council stated:
“The Federal Council is aware of the major challenges, both legal and monetary, which would be accompanied by the use of an e-franc… It asks that the proposal be adopted to examine the risks and opportunities of an e-franc and to clarify the legal, economic and financial aspects of the e-franc.”
The idea to develop a national cryptocurrency was put forward in February by Romeo Lacher, chairman of the Swiss stock exchange SIX. He said, “An e-franc under the control of the central bank would create a lot of synergies – so it would be good for the economy.”
Other traditional financial institutions in the country have remained wary of the introduction of cryptocurrencies. Board Member of the Swiss National Bank
Andréa Maechler said
last month, that private-sector digital currencies are better and less risky than nationally-issued versions, as a government-issued cryptocurrency could increase the risk of so-called “bank runs.”
In Switzerland, if the proposal is approved, a study will be produced by the Swiss finance ministry. No timing has been given on when it would be published should the go-ahead be given.
Several countries have begun evaluating the viability of introducing their own state-backed digital currency, with Sweden’s Riksbank saying an e-crown might help counteract issues arising from declining cash use and help make payment systems more robust.
But existing digital currencies such as bitcoin have been hampered by extreme volatility, high-profile hacks and doubts about long-term viability. Venezuela has issued a state-backed coin, but major developed economies have so far steered clear.
The Bank of International Settlement in March warned central banks to think hard about potential risks and spillovers before issuing their own cryptocurrencies.