Thomas Jordan, Chair of the Swiss National Bank, says that a public central bank digital currency is not needed and that interbank testing should be the main focus.
Reuters quotes Thomas Jordan, the head of the Swiss National Bank (SNB), as saying that Switzerland probably won’t introduce a public central bank digital currency (CBDC) any time soon because the risks of the technology still outweigh the possible benefits.
Swiss Central Bank Digital Currency
Jordan said at an event in Zurich that consumers and businesses already have access to many efficient and new payment options through the private sector. He also said that a retail CBDC could greatly change the current financial framework.
“Retail CBDC could fundamentally alter the current monetary system and the role of central banks and commercial banks, with far-reaching consequences for the financial system.”Thomas Jordan
The SNB has already tried using wholesale CBDC more than once, making it easier for private banks like UBS and Zuercher Kantonal Bank to make transactions using central bank funds. This has sped up and reduced the cost of payments.
There are still some issues that need to be fixed, though, since the technology is still very new. Jordan stressed how important it was to deal with problems like whether it is possible to hold Swiss franc digital central bank funds overnight, how to pay people, and which financial institutions are eligible.
The SNB’s cautious approach is in line with what other banking regulators have said. Sweden’s central bank, Riksbank, put out a study note in the middle of March warning about the possible risks of CBDCs, especially when it comes to offline transactions with data that isn’t synchronized.
The Riksbank stressed how important it was to match up offline activities with online balances. This was done to address worries about liquidity risks that could come from shadow wallets and nodes that help offline and online wallets connect.
