It seems not all countries have given up on the idea of creating their own national cryptocurrencies. For Switzerland, the current plan of action involves looking into a state-backed “e-franc”. The Swiss government may commission a report on the risks and opportunities associated with launching such a cryptocurrency in the future.
The Swiss E-Franc Plan
Over the past few years, various countries and central banks have made it clear that they are contemplating issuing national cryptocurrencies. So far, most of those plans have been put on the back burner indefinitely, but that doesn’t mean all governments have given up on the idea. Switzerland, a country which appears to be pro-cryptocurrency, is currently looking into creating an e-franc cryptocurrency.
For those unaware, Switzerland is one of the European countries which don’t use the euro. Instead, all day-to-day transactions are still conducted using the Swiss franc. This currency has experienced a significant increase in value over the past few years, whereas the euro has been on the decline. Further setting the country apart from Europe’s “unified currency” by creating a national cryptocurrency seems to make some sense.
With the Swiss government potentially requesting a report on the risks and opportunities associated with issuing an e-franc, an interesting tone has been set. Such a report would not mean the government will actually create its own cryptocurrency, but it shows that the idea has at least some interest in the country. An e-franc would use similar technology to Bitcoin, but be fully state-backed. It remains unclear if it would be pegged to the Swiss franc or any other commodity in the country.
This news comes at a rather interesting time. The European Central Bank has made it clear that cryptocurrencies such as Bitcoin are here to stay, yet it doesn’t seem to favor central bank-issued digital currencies. Additionally, the Bank for International Settlements recently warned central banks and governments not to issue such currencies without first contemplating the risks. A report on the matter would provide valuable insights as to what the future may hold for the e-franc.
For the time being, the decision to conduct this study rests with the lower house of the Swiss parliament. If they approve the study, it will be conducted by the Swiss finance ministry. No timeline has been put in place for sharing the findings with the public, although it seems safe to assume that compiling the report would take a few months at least. The Swiss government is convinced that this proposal makes a lot of sense, although major hurdles will need to be overcome in the process.
The Swiss National Bank, on the other hand, remains rather cautious of the e-franc concept. Private sector digital currencies are still an untested business model, and the legal implications should not be underestimated. Additionally, the monetary impact of this digital currency should not be underestimated by any means. It is an interesting situation worth keeping an eye on, as Switzerland may set a very intriguing precedent in the years to come.