Switzerland has ruled out the possibility of a central bank-issued digital franc for the general public in the foreseeable future. The government has backed up the Swiss National Bank’s (SNB) fears that this would lead to financial instability.
Responding to a parliamentary question, the Federal Council on Friday said an ongoing project to produce a digital franc that is restricted for use by financial players was a more sensible option than a cryptocurrency for people to buy their groceries or other goods.
Its report acknowledged claims that digital currencies could make payments more efficient and help tackle money laundering. But it concludesexternal link that “central bank digital currency cannot meet these expectations, or only partly,” and that such a move could bring “newly arising risks to monetary policy and financial stability”.
However, the report addsexternal link: “Rapid technological developments, changing payment behaviour and needs, and the experience of other countries may lead to a reassessment of the opportunities and risks of CBDC for the general public in the future.”
The SNB is currently working with stock exchange operator SIX Group to produce a digital version of the franc to settle trades on the planned new digital exchange SDX. This would entail trading counterparties depositing francs at the SNB in exchange for a corresponding value of digital tokens to use purely on the SDX platform.
Several other central banks are also exploring similar options, including reports that China is poised to launch a digital renminbi. The private sector has also jumped on the bandwagon with projects such as the JP Morgan Coin and the Utility Settlement Coinexternal link, which was put into motion by UBS before widening into a consortium of global banks.