Swiss central bank wary of Libra stablecoin impact
The Swiss National Bank (SNB) has warned that cryptocurrencies whose value is pegged to traditional money could undermine its ability to ensure price stability. This could bring Facebook’s Geneva-based Libra cryptocurrency project into direct conflict with the central bank.
This content was published on
3 minutes
When not covering fintech, cryptocurrencies, blockchain, banks and trade, swissinfo.ch's business correspondent can be found playing cricket on various grounds in Switzerland - including the frozen lake of St Moritz.
Speaking in Basel on Thursday, SNB chairman Thomas Jordan outlined the central bank’s thinking on digital currenciesExternal link. So-called stablecoins, which hold reserves of francs, dollars and other currencies in proportion to the amount of tokens issued, are much more likely to succeed as competition to traditional forms of payment, he said.
This is because these pools of traditional currencies should, at least theoretically, prevent the value of such cryptocurrencies from fluctuating wildly.
Jordan saw no problem with stablecoins, backed by Swiss francs, operating within Switzerland. “As long as prices, wages and loans are set in Swiss francs, the SNB can influence incentives for savers and borrowers via its monetary policy and thus ensure price stability over the medium term,” he said.
“However, if stablecoins pegged to foreign currencies were to establish themselves in Switzerland, the effectiveness of our monetary policy could be impaired.”
Jordan did not specifically single out Libra in this respect, but the cryptocurrency plans to launch next year pegged to a basket of different currencies. The project has caused alarm among regulators and politicians around the world. A delegation of US Congress members recently visited Switzerland to share their concerns of Libra destabilising the global monetary system.
Digital Swiss franc?
Swiss think tank Avenir Suisse last month published a studyExternal link that outlined other ways that Libra could adversely affect the SNB’s monetary policy powers. If Libra employs francs among its baskets of price-stabilising currencies, it could increase demand for the Swiss currency.
“Since Libra and its imitators are primarily bought with foreign currency, [a time of financial crisis] would further increase the pressure on the franc to appreciate,” the report states. This would be a problem for the SNB that already faces a fight to prevent the franc from gaining in strength.
On Thursday, Jordan also raised the possibility of the SNB issuing a digital version of the Swiss franc, but only if it was issued to banks and other financial players rather than the general public.
However, Jordan said more research needs to be done to establish whether such a digital currency would work and to evaluate how much real benefit it would bring.
Swiss justice minister hopes EU reform will reduce irregular migration
This content was published on
The European Union’s (EU) New Pact on Migration and Asylum aims to curb irregular migration within Schengen, Justice Minister Beat Jans said on Tuesday.
Swiss electricity supply outlook positive despite uncertainties
This content was published on
Thanks to well-filled gas stores in Europe and increased availability of French nuclear power, the Swiss Federal Electricity Commission is optimistic.
Finance minister wants Swiss banks to hold more equity
This content was published on
Finance Minister Karin Keller-Sutter has repeated calls for banks and their holdings in subsidiaries abroad to hold more equity.
Telecoms sector kept Swiss competitions regulator busy in 2023
This content was published on
Last year, the Swiss Competition Commission (COMCO) conducted 27 investigations and initiated 17 preliminary investigations.
This content was published on
Although Swiss International Air Lines (SWISS) achieved higher revenue at the start of the year, it suffered a dip in profits.
40,000 signatures against animal testing in Switzerland
This content was published on
Switzerland should do away with “restrictive” animal testing and should become a model for innovative, effective, and pain-free scientific research.
More than 45,000 signatures in favour of federal funding for UNRWA
This content was published on
The Foreign Affairs Committee of the House of Representatives (FAC) is expected to decide on the funding of the UNRWA at the beginning of the week.
This content was published on
At the end of January 2024, 6,881 men and women were behind bars in Switzerland. Almost 95% of all places were occupied, the highest number since 2014.
If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.
Read more
More
Swiss data commissioner checks up on Libra cryptocurrency
This content was published on
The Federal Data Protection and Information Commissioner (FDPIC) has reached out to the Facebook-backed Libra Foundation in Geneva.
Libra stablecoin wants Swiss financial regulatory control
This content was published on
Marcus also believes that Switzerland’s data protection commissioner should oversee Libra’s stated commitment not to monetise users’ data in the way that Facebook makes profit from selling personal information to advertisers. Marcus presented a written statement ahead of a hearing held by the US Congress House Financial Services Committee. The hearing was set up partially to address “national…
Swiss role in Facebook cryptocurrency project revealed
This content was published on
The social media giant has released details of its cryptocurrency payments project, including the role to be played by its Geneva-based foundation.
What does Facebook’s Libra cryptocurrency aim to achieve?
This content was published on
Libra Association head of policy and communication explains how Facebook's cryptocurrency project could democratise finance.
You can find an overview of ongoing debates with our journalists here . Please join us!
If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.