Swiss Central Bank President Rejects Bitcoin as a Reserve Currency, Cites Volatility and Liquidity Concerns
Swiss National Bank (SNB) President, Martin Schlegel, rejected Bitcoin as a nations currency, claiming that the asset is too volatile. Schlegel, president of SNB since October 2024, prefers assets like gold or bonds because they can bring stability to a volatile market. Bitcoin, conversely, can be highly volatile in a short period, adding volatility to markets. For this reason, Schlegel rejects Bitcoin, as an asset for the central bank, because he prefers assets that stabilise markets.
Schlegel points out that a national bank does not necessarily have to offer cryptocurrencies. This is not to say that cryptocurrency should be restricted from other banks, but rather, it may not be appropriate for a central bank. He points out, further, that crypto still only has a small market share compared to other assets. For this reason, Schlegel describes Bitcoin as a niche phenomenon.
According to Schlegel, cryptocurrencies do not meet the standards expected of traditional currencies.
Schlegel argues that Bitcoin is free from regulatory structures traditionally used with currencies. A central bank manages a currency with regulatory structures. Therefore, Schlegel concludes that a central bank cannot manage Bitcoin because its decentralized design makes it difficult for a central bank to manage it.
Schlegel mentioned two factors that convinced him that crypto was inappropriate for a central bank: 1) extreme volatility and 2) lack of liquidity. A central bank needs to access funds quickly in a crisis, and Bitcoin is still difficult to convert to fiat money.
In December 2024, a committee urged the central bank to adopt Bitcoin. They wrote a document titled For a financially strong, sovereign, and responsible Switzerland. The committee then started a petition, collecting signatures throughout Switzerland. It took 18 months to collect over 100,000 signatures, to require the central bank to adopt Bitcoin.
Schlegel responds that Bitcoin is impossible for a central bank, repeating concerns about volatility and lack of liquidity. He adds that it would be nearly impossible to liquidate Bitcoin reserves in large quantities in a crisis.
Meanwhile, the initiative For a financially strong, sovereign, and responsible Switzerland continues to push for a reserve Bitcoin. It plans to amend Article 99, Paragraph 3 of the Swiss constitution to mandate the central bank to allocate Bitcoin reserves. Currently, the Swiss central bank has a mandate to hold gold reserves.
The group published their demands in the Federal Bundesblatt, which allows them to collect 100,000 signatures until June 30, 2026.
Text source: ZyCrypto
