In a speech in Zurich last week, Andrea Maechler, governing board member of the Swiss National Bank (SNB), suggested that blockchain technology had “potential”, but cryptocurrencies still weren’t “comparable with money”.
In recent years, Swiss banks have been reluctant to have anything to do with cryptocurrency firms. Despite Switzerland’s tradition of banking secrecy which dates back to the Middle Ages, a new banking “secrecy”, distributed ledger technology (DLT), has been of little interest to major banking players in the Alpine country. Some smaller banks have introduced cryptocurrency asset management schemes over the past few years but the larger banks remain skeptical.
Outside of the banking sector, the Swiss have warmed to digital currencies. Dozens of startups have used blockchain technology to raise millions of Swiss francs through initial coin offerings. In Zug, 30 kilometres south of Zurich, huge amounts of digital currencies have traded daily since 2013 at Crypto Valley. The organization is self-described as being an “independent, government-supported organization… dedicated to developing and executing a community-driven program targeted at establishing and growing our ecosystem”.
Maechler’s address highlighted the fact that SNB was still concerned about the “risks” behind “new innovations”. Referring to blockchain technology, she indicated that banking security was particularly important in the current Swiss banking system although the bank welcomed “innovations which advance efficiency”.
The co-existence of two systems within the Swiss banking system was another area of concern. Meaechler suggested that “should DLT take hold in securities settlement, the question would then arise as to how DLT-based securities systems and conventional central bank systems can coexist”. She argued that it would be the market that would decide “which technologies and solutions would prevail”.
Her final comments would offer little solace to those in Switzerland’s cryptocurrency environment looking for more cooperation between crypto exchanges and banking sectors. Viewing any synergy as a matter of “debate”, she suggested: “Digital central bank money for the general public is not necessary to ensure an efficient system for cashless payments. It would deliver few advantages but would give rise to incalculable risks with regard to financial stability.”