Cryptocurrencies have gained immense popularity lately. While some view it as a means to store wealth away from the reach of the authorities, others view it as a solid investment. The regulators don’t have similar notions. The increase in crypto popularity has also resulted in a surge of various illicit activities related to it. This has forced the regulators in many nations to restrict its use. It’s like the saying goes if you can’t regulate it, ban it.
Every government has its own notions regarding this emerging industry. Nobody wants to be left behind in this technology race. Some governments are curbing the use of cryptocurrency within their territories, but developing their very own state-backed cryptocurrency.
China is the closest to launching their national cryptocurrency. The country has always played a major role in the growth of the crypto industry especially because it is very popular among the people there. China has been very active in the cryptocurrency race as a national cryptocurrency could potentially give the government more control over the nation’s economy.
Chinese president Xi Jinping made some bullish comments about blockchain technology back in October stating that China should “take the leading position in the emerging field of blockchain.” While the people considered this a boost to cryptocurrencies, the Chinese state-media was quick enough to respond stating that the people shouldn’t “speculate” about virtual currencies.
But it looks like not all nations have similar views about a national cryptocurrency. According to a press release published on the federal council’s website, Switzerland, one of the crypto-favouring nations, has put the idea of a national cryptocurrency on hold for now. During a meeting on 13 December 2019, the Federal Council, in response to a request from the National Council, approved this report examining the opportunities and risks of introducing a cryptofranc (e-franc).
After an analysis, the Federal council has come to the conclusion that a central bank digital currency would only “partly” meet the perceived benefits like financial inclusion, digital money without default risk, improved payments efficiency, monetary policy effective and financial stability. A part of the report reads:
“Universally accessible central bank digital currency would bring no additional benefits for Switzerland at present. Instead, it would give rise to new risks, especially with regard to financial stability.”
The Swiss National Bank (SNB) and the Federal Council both believe that Aside from the risks that accompany a retail CBDC, it would also require legislative changes and wouldn’t bring any added benefits for Switzerland. Besides this, the SNB is already engaged in exploring a wholesale digital currency. The report reads:
“A ‘wholesale token’ issued by the SNB could possibly help to enhance efficiency in the trading, settlement and management of securities.”
As of now, the Federal Council and the SNB will closely monitor developments in CBDC sector.
Prior to this report, The Daily Chain had reported last month that Sweden Central Bank Governor Stefan Ingves had cited a few pointers as to how a Swedish national cryptocurrency should function and what properties would it hold.