The Federal Council of the Government of Switzerland is considering the establishment of a national digital currency called the e-franc, with Reuters reporting Thursday a study has been requested into the possibility of its establishment.
The e-franc would utilize blockchain technology while operating under the jurisdiction of the Swiss state. The Federal Council requested the report, prompted by the vice-president of the Social Democratic Party, Cedric Wermuth. The motion is currently waiting for approval from the lower house of the Swiss Parliment before it can proceed.
The Federal Council commented on the study, saying: ”[The Council] is aware of the major challenges, both legal and monetary, which would be accompanied by the use of an e-franc. It asks that the proposal be adopted to examine the risks and opportunities of an e-franc and to clarify the legal, economic and financial aspects of the e-franc.”
The initial idea behind developing the state-backed cryptocurrency came from the chairman of the Swiss stock exchange SIX, Romeo Lacher. As reported by Cointelegraph, Lacher shared his positive sentiments of such a digital currency, saying “An e-franc under the control of the central bank would create a lot of synergies – so it would be good for the economy.”
While no timeframe has been provided regarding the period it will take for the lower house to come to a decision, should it be approved, the Swiss Finance Ministry will be responsible for coordinating the study.
Crypto in Switzerland
This news has come as somewhat of a surprise considering Switzerland’s largest bank UBS [SIX: UBSG] declined to facilitate Bitcoin trading earlier this month. Axel Weber, chairman of the bank, shared his negative perception of cryptocurrencies in a statement calling for stricter regulations. “[Cryptocurrencies] are often not transparent and, therefore, open to being abused,” he said.
Andréa Maechle, Board Member of the Swiss National Bank, last month expressed his view on nationally issued digital currencies, citing them as inferior to their private sector counterparts. Maechle noted that government-issued cryptocurrencies have an increased risk of bank runs- when a large number of customers of a bank or another financial institution withdraw their deposits simultaneously due to concerns about the bank’s monetary holdings.
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