Switzerland’s Federal Council Calls For Study On State-Backed Cryptocurrency

News | May 18, 2018 By:

Switzerland’s Federal Council has requested a report on the risks and opportunities of introducing its own national cryptocurrency, the “e-franc.”

The study on the benefits and risks of a state-backed cryptocurrency was proposed by Swiss lawmaker Cedric Wermuth, vice-president of the Social Democratic Party. The Federal Council supported the lawmaker’s call to investigate the subject. Now, the country’s National Council, the lower chamber of its parliament, has to decide whether to support the Federal Council’s request.

“The Federal Council is aware of the major challenges, both legal and monetary, which would be accompanied by the use of an e-franc,” said Wermut. “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.”

If the proposal is approved, the research will be produced by the Swiss Finance Ministry. No timing has been given on when it would be published should the go-ahead be given.

The Swiss National Bank (SNB), the central bank of the country, has so far been cautious on the issue. Last month, Andrea Maechler, SNB Governing Board member, said that a state-backed cryptocurrency for the general public is not necessary to ensure an efficient system for cashless retail payments.

“There would be little to no advantage in this respect, incurring incalculable risks in the area of financial stability, and this would call into question the proven two-tier system,” Maechler said. “Instead of operating as the ‘bank of banks’ today, the SNB would act as a commercial bank towards the end customer. This would aggravate the bank run problem in times of crisis.”