Swiss National Bank Reaffirms Cash’s Role Amid Digital Payment Growth

• The SNB warns of crypto’s volatility, high energy demands, and regulatory issues.
• The SNB pilots a CBDC for bank payments and launches instant payment systems.
• SNB values cash’s role, planning new Swiss-themed banknotes despite digital growth.

The Swiss National Bank (SNB) remains cautious toward crypto assets, citing their limitations and volatility. According to a Reuters report, SNB Chairman Martin Schlegel highlighted the challenges that digital assets like Bitcoin and Ether pose as payment methods.

Despite the growth in digital currencies, Schlegel said they remain a minor factor in the larger financial picture.

As digital currencies gain popularity and value, Schlegel pointed to their volatility as a barrier to adoption for daily transactions. He noted the fluctuating crypto values make them impractical as stable payment tools.  

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Additionally, Schlegel expressed concerns on energy demands of cryptocurrency operations, an issue that has been increasingly scrutinized worldwide as digital currency mining requires large amounts of electricity. He added that cryptocurrencies have been associated with illicit activities and remain challenging to regulate.

SNB’s Approach to Financial Technology Innovations

Despite the central bank’s skepticism towards private digital currencies, Schlegel emphasized that the SNB is not resistant to technological advances in the financial sector.

He shared details of a pilot program that is exploring the use of a central bank digital currency (CBDC) to ease interbank payments. The CBDC initiative aims to streamline transactions between financial institutions, enhancing efficiency and security in Switzerland’s financial systems.

Cash Remains Crucial Despite Digital Transition

While digital payment systems expand, the SNB continues to support physical cash as a core element of Switzerland’s payment system. More than 90% of Swiss residents, Schlegel noted, still want access to physical money.

In line with this, the SNB revealed plans for a new series of banknotes, “Switzerland and its altitudes,” which is expected to launch in the early 2030s. The upcoming series will honor various Swiss regions, from valleys to high mountain ranges.