The Swiss National Bank (SNB) has taken a definitive stance against incorporating cryptocurrencies into its financial portfolio, citing significant concerns over liquidity and price volatility. Bank representatives articulated that these risks could intensify during economic turmoil, prompting a prudent approach to their investment strategy.
What Influenced the SNB’s Decision?
During a recent assembly, SNB President Martin Schlegel conveyed that while cryptocurrency market liquidity might appear adequate, it requires reevaluation during crises. He pointed out the pronounced price volatility of digital assets, arguing that these factors undermine their suitability as a stable reserve option for the bank.
Martin Schlegel: “The inherent high price volatility of crypto assets poses risks for long-term value storage. We believe it does not fit our reserves under the current conditions.”
In contrast, advocates for Bitcoin suggested that allocating a minor percentage of cryptocurrencies could bolster the Swiss treasury’s returns. Their simulations indicated that even a modest 1% investment in crypto could lead to significantly improved outcomes compared to traditional investments.
How Do Other Countries View Cryptocurrencies?
Bitcoin supporter Luzius Meisser asserted that cryptocurrencies remain robust in challenging market conditions, consistently demonstrating high liquidity due to substantial transaction volumes. According to him, Bitcoin has recently achieved new price milestones, reinforcing its status as a dependable technological infrastructure.
Luzius Meisser: “Bitcoin’s price has reached new peaks, maintaining its resilience against market stress, and the system stands out as one of the most reliable technological infrastructures.”
Conversely, European Central Bank President Christine Lagarde voiced concerns regarding cryptocurrencies, emphasizing their vulnerability to liquidity and security threats, as well as their potential ties to criminal activities. Other central banks have echoed her worries, while some, like those in Poland and Romania, have highlighted the necessity for effective legal frameworks.
In the United States, Federal Reserve Chairman Jerome Powell noted that current regulations exclude cryptocurrencies, although recent updates suggest a move toward establishing a strategic cryptocurrency reserve in the near future.
Although SNB does not possess cryptocurrencies directly, it has indirect exposure through shares in relevant companies. The bank remains vigilant in observing technological innovations and is piloting projects for digital currencies aimed at enhancing interbank transactions.
- The SNB prioritizes stability over potential high returns from cryptocurrencies.
- Volatility and liquidity risks remain central concerns for financial institutions globally.
- International perspectives vary, with some advocating for legal regulations to manage risks.
The cautious attitude of the SNB towards cryptocurrencies reflects broader trends in financial policy discussions worldwide, with an emphasis on risk management while recognizing the potential for high returns in the cryptocurrency market.
