Swiss National Bank Rejects Bitcoin as Reserve Asset: Stability Over Crypto

The Swiss National Bank (SNB) has firmly rejected the idea of adding Bitcoin to its official reserves. SNB President Martin Schlegel emphasized that Bitcoin and other cryptocurrencies do not meet the bank’s strict requirements for currency reserves, mainly due to concerns about market liquidity and extreme price volatility

Why Did the SNB Say No to Bitcoin?

Stability and Liquidity Come First

• The SNB’s top priority is keeping Switzerland’s financial system stable.
• Bitcoin’s price swings wildly-sometimes dropping 60% in a year-making it unreliable as a safe store of value.
• The SNB needs assets it can buy and sell quickly, even in a crisis. Bitcoin’s trading volumes and unpredictable price make that risky.

No Central Backing

• Bitcoin isn’t backed by any government or central authority.
• This makes it more vulnerable to speculation and manipulation compared to traditional reserve assets like gold or major currencies.

Strategic Incompatibility

• The SNB needs to act fast in emergencies. Bitcoin’s volatility and liquidity issues make it tough to use as a reserve tool.

The Push for Bitcoin in Swiss Reserves

• Crypto advocates are pushing for a referendum to force the SNB to hold Bitcoin alongside gold.
• They argue Bitcoin could be a hedge if trust in government debt collapses.
• The campaign needs 100,000 signatures to trigger a national vote.

SNB’s Position in Context

• Switzerland is known for its crypto-friendly environment, but the SNB remains cautious.
• The bank’s leadership says traditional assets like gold and major currencies are safer for now.
• Other central banks, like the ECB and the U.S. Federal Reserve, share similar concerns about crypto’s risks.

Table: SNB Reserve Criteria vs. Bitcoin

Key Takeaways

• The SNB rejects Bitcoin for reserves because of volatility and liquidity risks.
• Crypto advocates are trying to force the issue with a referendum.
• The SNB’s stance is about protecting Switzerland’s financial stability.
• Traditional assets remain the bank’s focus.

FAQs

Q: Why did the SNB reject Bitcoin?

• A: Bitcoin is too volatile and not liquid enough for the SNB’s strict reserve requirements.

Q: What is the referendum about?

• A: It aims to change the Swiss constitution so the SNB must hold Bitcoin alongside gold.

Q: Could the SNB change its mind?

• A: Possibly, if Bitcoin becomes more stable and liquid, but for now, the SNB is sticking to traditional assets.

Q: Is Switzerland anti-crypto?

• A: No. Switzerland is a global crypto hub, but its central bank is cautious about using crypto as a reserve asset.

Q: What does this mean for other central banks?

• A: Many are watching Switzerland’s move, but most remain hesitant to adopt Bitcoin for reserves.

The Swiss National Bank’s stance reflects a conservative approach focused on safeguarding the country’s financial stability amid growing calls for crypto inclusion. The ongoing public debate and referendum campaign will determine if this position shifts in the near future.