Swiss Government Weighs Options to Launch Its Own State-Backed Cryptocurrency ‘e-Franc’

The federal government of Switzerland is currently weighing several options, risks and opportunities for launching its own blockchain-powered state-owned cryptocurrency “e-franc”. Swiss lawmaker and Vice President of the Swiss Social Democratic party, Cédric Wermuth, with a support from the seven-member Federal Council, has proposed for a government to assess the possibility of having the country’s own native digital currency.

Wermuth said: “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 decision is currently in the hands of the lower house, the National Council, who will be deciding whether or not to back the federal request. Only after the National Council agrees, the federal request will be allowed to move forward.

However, earlier this year, the Swiss Central Bank has warned on the interactions with digital currencies. In April last month, Andrea Maechler, a member of the Swiss central bank’s governing board, said: “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. There would be little to no advantage in this respect, incurring incalculable risks in the area of financial stability, and this would call into question the proven two-tier system. Instead of operating as the ‘bank of banks’ today, the SNB would act as a commercial bank towards the end customer. This would aggravate the bank run problem in times of crisis.”

Switzerland which has been a financial tax-haven for over the years is also home to the thriving blockchain industry. The Swiss Crypto Valley is home to some of the world’s most famous blockchain organizations like the Enterprise Ethereum Alliance.

Note that Switzerland is not the first European nation to propose this idea of having a state-owned digital currency. Sweden’s Riksbank has also been exploring on having the country’s digital currency called ‘e-krona’ which “would have the potential to counteract some of the problems that could arise on the payment market in the future when the use of cash is rapidly declining.” The e-krona,however, would be backed by the fiat krona to eliminate risks associated with crypto volatility.