Martin Schlegel, President of the Swiss National Bank (SNB), has made it very evident that Bitcoin falls short of qualifying as a reserve asset. Schlegel claims that the instability of the bitcoin, lack of liquidity, and inherent security concerns make it inappropriate for inclusion in the financial plan of the SNB.
Speaking with the Swiss media, Schlegel voiced his doubts about Bitcoin’s place in the financial system because of its great volatility. He maintained that an asset with erratic price swings cannot, over time, adequately preserve value. Furthermore, underlined by him was the need for reserve assets to be highly liquid so they could be rapidly accessible and used for changes in monetary policy as needed.
Another main issue expressed by the SNB president was security issues. Bitcoin and other digital assets are vulnerable, including possible faults and cyber attacks, as they are totally software-based. Such flaws, Schlegel underlined, further reduce the dependability of the cryptocurrencies as a reserve asset.
Notwithstanding these issues, Switzerland has been leading in the acceptance of cryptocurrencies since various financial institutions provide crypto-related products. Schlegel, however, minimized the importance of Bitcoin in the larger economic scene, characterizing it as a “niche phenomenon” rather than a major rival to conventional currencies like the Swiss franc. Citing the ongoing strength and stability of the national currency, he confirmed that the central bank is not concerned about competitiveness from cryptocurrencies.
Concurrent with this is a citizen’s initiative in Switzerland calling for a constitutional change requiring the SNB to add Bitcoin to its holdings alongside gold. Started in December, the project needs to collect 100,000 signatures in eighteen months to be eligible for a public referendum. Should this prove effective, this might start a national conversation on the future place of Bitcoin in Switzerland’s financial framework.
While nations like El Salvador have included Bitcoin in their reserves, others, such as Poland, have clearly ruled it out. The argument raging in Switzerland is crypto supporters pressing for Bitcoin’s inclusion while the SNB stays strong in its resistance.
