Swiss National Bank: Bitcoin Remains a 'Niche Phenomenon' Despite Crypto Growth

Despite the significant rise in cryptocurrency values over recent years, the Swiss National Bank (SNB) remains cautious about digital currencies, according to Chairman Martin Schlegel.

Speaking on November 7, 2024, Schlegel emphasized that physical cash will continue to play a central role in Switzerland's payment system, with cryptocurrencies like Bitcoin and Ethereum still considered "niche phenomena." Although acknowledging the substantial growth of crypto assets in recent years, Schlegel argued that their volatility limits their usefulness for everyday transactions.

Schlegel raised concerns about several key issues, including the energy consumption of cryptocurrencies and their potential ties to illicit activities, which make them difficult to regulate effectively. These factors contribute to the SNB’s cautious stance toward the wider adoption of digital currencies.

However, Schlegel indicated that the SNB is not ignoring technological advancements in the financial sector. The central bank is actively exploring the potential of a central bank digital currency (CBDC) through a pilot project aimed at improving interbank payments. While Switzerland is investigating the use of state-backed digital money, Schlegel reiterated the country’s ongoing commitment to physical cash.

Earlier this year, Thomas Jordan, the former Chairman of the Swiss National Bank, stated that Switzerland is unlikely to introduce a public CBDC in the near future. Jordan pointed out that the risks associated with such technology currently outweigh its benefits, especially since there are already efficient and innovative payment solutions available in the private sector. He also cautioned that the introduction of a retail CBDC could fundamentally disrupt the existing monetary system.

In summary, while Switzerland is exploring the potential of digital currencies in certain areas, the country remains committed to its traditional financial infrastructure, including cash payments.