Swiss National Bank: Cryptocurrencies Will Not Rival Conventional Cash

Apr 07, 2018 at 5:06

According to a report from Reuters, an official from the Swiss National Bank (SNB) said that cryptocurrencies are not true competitors to conventional currencies despite soaring interest in products such as Bitcoin.

“Digital central bank money for the general public is not necessary to ensure an efficient system for cashless retail payments… It would deliver scarcely any advantages, but would give rise to incalculable risks with regard to financial stability by calling into question the tried-and-tested two-tier system,” SNB governing board member, Andrea Maechler said during an event in Zurich.

Under the current system, the SNB acts as bank to commercial banks, which in turn deal with end customers.

However, she noted that private-sector digital currencies are better and less risky than any version that might be offered by a central bank, indicating that SNB has no appetite for launching its own e-money.

Maechler also mentioned that another factor that will make conventional cash still ideal is its capability to be a viable medium of exchange with a stable value of unit as well as its function to be used in long-term storage, especially for saving.

“Cryptocurrencies such as the much-discussed bitcoin do not perform these functions adequately, if at all,” she expressed, adding that digital currencies’ high degree of price volatility serves more likely as “a speculative investment instrument than a means of payment capable of maintaining their value.”

However, the official said that some of the technology used in cryptocurrencies such as the blockchain technology has potential for wider use especially in buying and selling of securities and cross-border payments as it will eliminate the need for an intermediary in transactions.