Swiss Federal Council Requests Report On State-Backed ‘e-frank’
The Swiss Federal Council has requested a study of the state-backed digital currency ‘e-franc’, to weigh the risks and opportunities of launching it, as reported by Reuters on May 17.
The lower house of the parliament of Switzerland will now have to decide whether they are ready to entertain the request of a study into the subject that has been well-discussed in Sweden. If the proposal gets accepted, the Swiss finance ministry will prepare a report on the subject. However, no timeframe has been so far decided for this process. The Federal Council of the Swiss government stated:
“The Federal Council is aware of the major challenges, both legal and monetary, which would be accompanied by the use of an e-franc. It asks that the proposal be adopted to examine the risks and opportunities of an e-franc and to clarify the legal, economic and financial aspects of the e-franc.”
The idea of creating a state-backed digital currency was put forward by the chairman of SIX, the Swiss stock exchange, a couple of months ago. Romeo Lacher, chairman of SIX said that a digital currency under the control of central bank would prove beneficial for the economy by creating a lot of synergies.
According to a Swiss central banker Andréa Maechler, digital currencies issued by the private sector are way better than those backed by the public sector. Furthermore, issuing such currencies could increase the risk of ‘bank runs’, she added. She also sees many problems with decentralized cryptocurrencies as they fail to compete with traditional currency requirements, effectively.
Earlier this month, UBS, Switzerland’s largest bank refused to offer to trade in cryptocurrencies. Axel Weber, chairman of UBS, asked for stricter controls on cryptocurrencies, as they often lack transparency and can, therefore, be abused for various reasons.
Switzerland certainly is moving in the right direction!