Swiss National Bank (SNB) President Martin Schlegel has firmly rejected proposals for the central bank to hold Bitcoin as part of its reserves, citing significant concerns about the cryptocurrency’s volatility, liquidity, and security. His comments come amidst a growing debate sparked by a recent people’s initiative advocating for Bitcoin inclusion in the SNB’s holdings.
In an interview with the Tamedia newspaper group, published on Saturday, Schlegel outlined several key reasons for his opposition. He emphasized that cryptocurrencies fail to meet the fundamental characteristics of a reliable currency.
“Firstly, cryptocurrencies are extremely volatile,” Schlegel stated, deeming this instability incompatible with the long-term preservation of the SNB’s investments. “Secondly, our reserves need to be highly liquid so that they can be used quickly for monetary policy purposes if needed.”
Furthermore, Schlegel highlighted the inherent security vulnerabilities of cryptocurrencies, noting their reliance on software. “We all know that software can have bugs and other weak points,” he warned.
The SNB president also downplayed the significance of the cryptocurrency market, labeling it a “niche phenomenon.” He pointed out that the total market capitalization of all cryptocurrencies, approximately CHF 2,000 billion, remains relatively small compared to the global financial system. “So we’re still talking about a niche phenomenon,” he said.
Addressing concerns about competition with the Swiss franc, Schlegel asserted that the SNB is not afraid of cryptocurrencies. He noted the strong demand for the franc, stating, “We’re not afraid of competition from crypto-currencies.”
The controversy stems from a people’s initiative, launched last December, which aims to amend the Swiss constitution and mandate the SNB to allocate a portion of its reserves to Bitcoin, alongside gold. The “For a financially strong, sovereign and responsible Switzerland (Bitcoin Initiative)” has 18 months to gather 100,000 signatures to trigger a national referendum.
While the initiative does not specify the exact amount of Bitcoin to be held, it is backed by a group of cryptocurrency advocates, including internet pioneer Yves Bennaïm. Bennaïm has stated that the primary goal is to stimulate public discussion on the role of cryptocurrencies in Switzerland’s financial future.
