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- The Swiss National Bank (SNB) has no plans to introduce a digital currency as a central bank
- Carlos Lenz, SNB’s chief economist, has announced no digital franc is needed because the existing payment system is working well
- The country has established a friendly atmosphere for start-ups in the Zug Valley
According to a report by the Swiss weekly trade journal Handelszeitung, the Swiss National Bank (SNB) does not plan to introduce a Central Bank digital currency (CBDC).SNB’s chief economist, Carlos Lenz, announced at a recent press conference held by the Swiss Banking Association that a digital franc is not required, because the current payments system does not work well. Lenz also criticized blockchain technology, calling it highly inefficient. A decentralized solution, he said, is not ideal, I do not think.
Swiss Parliament wishes Central Bank to have its own Digital Currency
Since at least 2019, the Swiss parliament has asked the government to look into the potential of creating a CBDC. Switzerland is researching digital currencies in the Central Bank. The government concluded in December 2019 that the digital franc is too risky. The country is one of the world’s hotbeds of innovation for blockchain startups in the Zug valley. Diem, formerly known as Libra, is also based in Switzerland, a Facebook-backed stabilizer project.
Despite the negative attitude of the Swiss Government towards the digital currencies of the central bank, the Swiss CBDC has continued research. A trial of the feasibility of the CBDC used by financial institutions was completed in 2020 by the Bank of International Settlements (BIS), and a cross-border CBDC experiment called Project Jura was launched by SNB and Bank of France earlier this month.
Blockchain, the underlying technology of cryptocurrencies like Bitcoin (BTC), is not the best solution for a central bank’s digital currency, according to an economist at Switzerland’s central bank. According to Carlos Lenz, chief economist at the Swiss National Bank, blockchain-based decentralization features are inefficient for state-controlled digital currencies like the digital franc, according to the German-language Swiss newspaper The Handelszeitung.
Lenz’s view on creating Digital Currency
But Lenz underlined that these studies – studies and not implementation – are just that during the press remarks. It’s not a matter of productivity implementation, Lenz said. No plans for introducing digital banking money are currently in place. This includes the wholesale area as well.
The Swiss central bank, according to Lenz, has no plans to introduce a Digital Franc at this time. The economist emphasized that Switzerland’s current payment system is sufficient and that a CBDC is not required. The economist added that if Switzerland opts out of the CBDC development, the franc will not be replaced by other currencies such as the euro.
Lenz compared the ongoing struggle to create a CBDC with the fear many felt in Switzerland at the time of the euro. When the euro was introduced, Lenz said, they had such discussions. There was also concern that sudden payments in euros would be made.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
