Switzerland’s central bank is running scared over its control on monetary policies in the face of stablecoins pegged to foreign currencies. | Source: Shutterstock; Edited by CCN
Switzerland’s central bank is fretting over the possibility of stablecoins pegged to foreign currencies eroding its ability to use its monetary policy tools effectively, further complicating the path for cryptocurrency projects such as Libra.
This was revealed by the chairman of the governing board of the Swiss National Bank, Thomas J. Jordan, in a speech delivered at the University of Basel.
Per Jordan, if foreign-currency stablecoins become dominant in Switzerland, the SNB’s ability to ensure price stability will be weakened:
…if stable coins pegged to foreign currencies were to establish themselves in Switzerland, the effectiveness of our monetary policy could be impaired.
The SNB, however, sees no such threat from Swiss franc stable coins.
“No point of launching retail central bank stablecoins”
While Switzerland has been viewed as relatively progressive with regards to cryptocurrencies, Jordan pointed out that he sees no use for a central bank digital currency (CBDC) for retail users such as households and businesses.
According to Jordan, this is because Switzerland’s cashless payment system is “reliable, secure and efficient” and thus ensuring that a retail CBDC would bring “virtually no advantages”
Though the SNB Chairman’s speech was to commemorate milestones achieved by the University of Basel’s Faculty of Business and Economics, it could easily have been a Facebook event as Libra was mentioned 7 times in a seven-page speech. So what does the SNB think of Libra?
Facebook Bank Inc?
Going by the SNB chairman, Facebook’s cryptocurrency project should expect to be regulated more rigorously.