Swiss National Bank Rejects Public CBDC Due to High Risks

The Swiss National Bank (SNB) has recently made headlines. Thomas Jordan, the SNB’s Chair, expressed views on the future of digital currency in Switzerland. He believes that there is no immediate need for a public central bank digital currency (CBDC). Jordan’s insights came to light at a Zurich event. He highlighted the strength of existing payment solutions. These are already serving consumers and businesses well, thanks to the private sector.

Jordan pointed out the complexities a retail CBDC might introduce. Such a digital currency could alter the current monetary system significantly. Instead, Jordan suggests a focus on interbank trials with wholesale CBDC. These trials aim to streamline and reduce the costs of transactions. They involve major financial institutions like UBS and Zuercher Kantonal Bank.

The Path Forward for Swiss Finance

Despite the progress in trials, challenges remain. Jordan calls for solutions on several fronts. These include the management of Swiss franc digital funds overnight. Also, he seeks clarity on the remuneration methods and the financial institutions that should have access.

This stance of caution is not unique to Switzerland. Similar concerns have arisen globally. For instance, Sweden’s Riksbank recently voiced its apprehensions. They focused on the need for better synchronization between offline and online transactions. This is to mitigate liquidity risks that could arise from disconnected systems.

The SNB’s approach reflects a broader trend of careful consideration. Financial regulators worldwide are weighing the benefits against the potential pitfalls of introducing CBDCs. For Switzerland, the focus remains on enhancing existing financial infrastructures. They prefer to explore the possibilities within a controlled environment before making any public launches. This ensures that any move towards digital currency is both thoughtful and beneficial for the Swiss financial ecosystem.