Effects of “E-franc” on Switzerland

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According to reports from the Swiss parliament, the Switzerland government is looking through the effects of establishing their own cryptocurrency called as the “e-franc”.

“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,” as stated in the proposal of the Federal Council.

The rise of the world of cryptocurrency was too fast for the government to have enough time in assessing its positive and negative sides.  Other countries like Vietnam, have not waited to study things through the idea of cryptocurrency and instead banned cryptocurrency trading. Others, like the member states within the European Union (EU), haven’t taken their side on these new coins as they sit and wait for something to happen.

Switzerland has chosen to let its cantons decide what they want to do with them. As a result of this, Zug has become a cryptocurrency capital in the country. However, a national cryptocurrency is an entirely different ordeal. This would require merchants and banks alike to have to deal with them on a daily basis, something that the central bank of the country isn’t looking forward to.

The country of Switzerland has chosen to let the cantons decide how they want it to be used which as a result,

On the previous month, the Schweizerishe Nationalbank (Swiss Nation) had only their only voice to share about the circulation of a national cyptocurrency

“We are convinced that private solutions are better suited to meet the end user needs. Digital central bank money for the general public is not necessary to ensure efficient cashless retail payments,” said Andrea Maechler, a member of the bank’s governing board.

She added that for the very invisible advantages such a concept offers, the implementation of an e-franc would be “incurring incalculable risks in the area of financial stability.” In addition to this issue, the SNB would also have to act as a commercial bank rather than a lender of last resort.

“This would aggravate the bank run problem in times of crisis,” she added.

Even with proposals from the Federal Council to look into the subject, it’s unlikely that an e-franc would come to fruition considering that the SNB holds such a strongly cautious position with regards to this particular idea.

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