SNB Boss Dismisses Bitcoin for Reserves: Volatility, Liquidity, Security Concerns

The Swiss National Bank (SNB) has dismissed the idea of holding Bitcoin as part of its reserve assets, according to local media reports. SNB President Martin Schlegel cited a lack of stability, liquidity, and security as the primary concerns surrounding cryptocurrencies.

In an interview with the Tamedia group, Schlegel highlighted the volatility of cryptocurrencies as a major issue, stating that it makes them unsuitable for long-term value preservation. He also emphasized the need for high liquidity in the central bank's reserves to facilitate quick action in monetary policy if necessary. Additionally, Schlegel pointed out the lack of security inherent in software-based assets, noting that software can have bugs and other vulnerabilities.

The SNB President's comments come amidst a growing debate in Switzerland over the nascent asset class. A recent initiative is pushing for a constitutional amendment that would require the SNB to hold Bitcoin in its reserves alongside gold. The initiative, launched in December and led by entrepreneur Yves Bennaim, does not specify the Bitcoin allocations but suggests building them up from the bank's earnings. It has 18 months to collect 100,000 signatures to trigger a nationwide vote on the topic.

Despite Switzerland's growing acceptance of cryptocurrencies, with various Swiss banks offering customers cryptocurrency-related services, Schlegel dismissed the asset class as a "niche phenomenon." He noted that currencies have already been in competition and expressed that the SNB is "not afraid of competition from cryptocurrencies," citing the continued strength of the Swiss franc.