Switzerland is not planning to launch a “universally accessible” Central Bank Digital Currency (CBDC), as the country believes that developing a digital franc for the general public would not bring any additional benefits to the nation’s financial system at the moment.
This was made known in a report approved by the country’s Federal Council today, in response to a request by the National Council to examine the pros and cons associated with issuing a CBDC for public use.
According to the report, the Federal Council noted that the analysis carried out on the prospects of launching a public CBDC revealed that it would not create new opportunities for its financial system, rather, it would expose the nation to new risks in terms of financial stability.
Notably, the growing increase in the demand for cryptocurrencies globally has forced several nations to weigh the possibility of issuing a digital currency backed by the central bank. Countries like China and Sweden, among others, seem to be ahead in that regard as efforts are already underway to develop their own CBDC.
CBDCs are believed to possess numerous benefits, including providing an efficient payment system, mitigating tax offenses and money laundering, as well as making nations’ monetary policies more stable.
However, the Federal Council still believes in its report that the negative implication of developing a digital Franc for public use outweighs its benefits while adding that “there are better solutions for most of the areas considered.”
As per the report, the Federal Council is more open to creating a digital Franc that would be designed specifically for financial market players.
The regulators noted that a “wholesale token” that is developed and issued by The Swiss National Bank (SNB) could help to boost trade efficiency, cross-border settlements, and management of securities.
Despite the reports published today, the Federal Council stated that it would continue to monitor developments on the pros and cons of launching a digital Franc.
Meanwhile, Coinfomania reported yesterday that the European Central Bank (ECB) plans to accelerate efforts in stating its objectives on why it should develop a CBDC.