With the belief that it could cause instability within the country’s financial system, the government of Switzerland spoke against making a central bank digital currency available to the public. According to Reuters, Parliament had asked the government to explore the potential for establishing an electronic Swiss franc.
The cabinet said after a meeting, according to Reuters, “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 Swiss National Bank (SNB) has been doubtful about releasing an electronic Swiss franc. The SNB and the Bank for International Settlements (BIS) are said to be exploring the widespread use of digital central bank currencies. Supporters believe that an electronic currency would result in a more effective monetary policy, a more efficient payment process and greater stability in the overall financial system. They also claim it could decrease money laundering and tax offenses.
The Swiss cabinet, however, reportedly said that central bank digital currency would not have the expected result and could actually have widespread negative repercussions.
Central bank digital currency would complement existing forms of money, like banknotes and sight deposits that commercial banks hold at the central bank. According to the report, most central banks are looking into the potential implementation and effects of electronic currencies, but only a few intend to issue them in the short to medium term.
In separate news, Denis Beau, the first deputy governor of the central bank of France, recently spoke in support of a blockchain-based settlement system that would allow for faster, more cost-efficient transfers of euros. Beau wants to use distributed ledger technology (DLT), and France is mulling a central bank digital currency. According to past reports, he said that “disorderly approaches and heterogeneous adaptations” could occur if the bank didn’t take decisive action.