Private digital currencies are better than any state-issued version, admitted a high-ranking representative of the Swiss National Bank. Cryptocurrencies are also less risky, according to Andrea Maechler, member of the central bank’s governing board. Her comments indicate that Switzerland has no intentions to emit a state-sponsored crypto.
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Digital Central Bank Money Brings Risks
“Private-sector digital currencies” are better and less risky than any version that might be offered by a central bank, the representative of the Swiss National Bank’s management thinks. “Digital central bank money for the general public is not necessary to ensure an efficient system for cashless retail payments”, Andrea Maechler said during an event in Zurich. She went on to explain why a crypto issued by a central bank could increase the risk of bank runs.
A government-backed cryptocurrency would make it easier for people to transfer money out of their accounts, if they felt a bank was in difficulties. “It would deliver scarcely any advantages, but would give rise to incalculable risks with regard to financial stability,” Maechler said, quoted by Reuters. In her option, a state-issued cryptocurrency would be calling into question the „tried and tested two-tier system” in which the SNB acts as a bank to commercial banks, which in turn deal with end customers.
Not all of Mrs. Maechler’s remarks were positive about cryptos. She thinks “cryptocurrencies are not true competitors to conventional currencies”, despite the soaring interest in bitcoin. The hype has outweighed their actual use, the banker says. SNB’s representative also pointed out that money must be a viable medium of exchange, a stable unit of account and a long-term store of value – functions that, in her words, cryptos don’t perform. Digital
