Swiss National Bank Chair Thomas Jordan has recently made it clear that Switzerland is not in a hurry to embrace a public central bank digital currency (CBDC), emphasizing that the risks of such a move currently outweigh the potential benefits.
Speaking at an event in Zurich, Jordan highlighted the plethora of efficient payment solutions available through the private sector, suggesting that introducing a retail CBDC could profoundly reshape the existing monetary landscape.
According to Reuters, Jordan cautioned that a retail CBDC could bring about fundamental changes in the roles of central and commercial banks, with far-reaching implications for the financial system.
Despite conducting various trials utilizing wholesale CBDC, where transactions between commercial banks such as UBS and Zuercher Kantonal Bank are facilitated using central bank funds to enhance payment efficiency and reduce costs, the SNB remains cautious.
However, Jordan emphasized that several unresolved questions surround adopting CBDC technology.
These include the feasibility of overnight holding of Swiss franc digital central bank funds, methods of remuneration, and determining which financial institutions would be eligible to participate in the system.
The SNB’s prudent approach mirrors similar sentiments expressed by other financial regulators globally.
In March, Sweden’s central bank, Riksbank, issued a research note highlighting potential risks associated with CBDCs, particularly concerning the synchronization of data in offline transactions.
Riksbank underscored the necessity of aligning offline transactions with online balances to mitigate liquidity risks arising from shadow wallets and intermediary nodes facilitating connections between offline and online wallets.
