The government of Switzerland wants to look at the effects of establishing its own cryptocurrency, called the “e-franc,” according to reports coming from the Swiss parliament.
“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 Federal Council said in its proposal.
The cryptocurrency world took off so rapidly that it didn’t give governments enough time to fully assess whether this is a good thing or something detrimental. Some, like Vietnam, have not waited to study things thoroughly and just outright banned cryptocurrency trading. Others, like member states within the European Union, haven’t taken a solid position on these new coins, choosing instead to sit and wait for something to happen that requires their attention.
Switzerland has chosen to let its cantons decide what they want to do with them. As a result of this, Zug has become a cryptocurrency capital in the country. However, a national cryptocurrency is an entirely different ordeal. This would require merchants and banks alike to have to deal with them on a daily basis, something that the central bank of the country isn’t looking forward to.
Last month, the Schweizerische Nationalbank (Swiss National Bank) had only words of caution to share about the circulation of a national cryptocurrency.
“We are convinced that private solutions are better suited to meet the end user needs. Digital central bank money for the general public is not necessary to ensure efficient cashless retail payments,” said Andrea Maechler, a member of the bank’s governing board.
She added that for the very invisible advantages such a concept offers, the implementation of an e-franc would be “incurring incalculable risks in the area of financial stability.” In addition to this issue, the SNB would also have to act as a commercial bank rather than a lender of last resort.
“This would aggravate the bank run problem in times of crisis,” she added.
Even with proposals from the Federal Council to look into the subject, it’s unlikely that an e-franc would come to fruition considering that the SNB holds such a strongly cautious position with regards to this particular idea.
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