Switzerland’s stock exchange chairman calls for ‘e-franc’
Romeo Lacher says a crypto version of currency would give country a digital lead
Switzerland should launch a cryptocurrency version of the Swiss franc as part of the Alpine country’s attempt to steal a competitive lead in digital technologies, its stock exchange chairman has urged.
Romeo Lacher told Financial Times that an “e-franc” backed by the Swiss central bank would boost the local economy as well as electronic payment systems which were increasingly replacing cash.
“I believe there would be a lot of upsides, we would be strongly supportive,” he said.
Cryptocurrencies are controversial among central bankers, many of whom are sceptical about volatile currencies such as bitcoin becoming widely used. There is also uncertainty about whether monetary authorities should introduce digital versions of their own currencies.
Sweden’s Riksbank, one of the most advanced in its thinking, has hinted strongly it will introduce an e-krona but the more conservative Swiss National Bank has not indicated it was considering such a move, saying there was “no need” for a crypto franc in response to Mr Lacher’s comments. Cash-based and cashless payment transactions in Switzerland were working smoothly, it added.
Mr Lacher is chairman of SIX Group, which is owned by Swiss banks and provides financial infrastructure services, including cashless payment systems, as well as share trading. “An e-franc under the control of the central bank would create a lot of synergies — so it would be good for the economy,” he said. “I don’t like cash.”
Earlier this year, Johann Schneider-Ammann, economics minister, said Switzerland wanted “to be the crypto-nation”. The country has become a hub for initial coin offerings, whereby start-ups sell digital tokens to investors, and a Swiss foundation is behind Ethereum, the second-biggest digital currency.
Mr Lacher welcomed the government’s ambitions despite the potential risks. “I think the strategic direction is good,” he said. “But it’s like going into fog. You don’t know what you will see on the other side. Many mistakes will be made, but we will also learn a lot and I am sure, we will be successful.”
He added: “My worry is that until recently, the value of cryptocurrencies has only been in one direction — up. After the first ICO to collapse, there will be burnt fingers.”
The risk for central banks if they do not launch digital versions of their currencies is that they hand control of payment systems to a “wild west” private sector. In a report last year, the Riksbank said payment facilities could become concentrated among fewer operators, making them more vulnerable to disruption. An e-krona would give consumers access to “risk-free” central bank money.
Axel Weber, chairman of UBS, said last year central banks should be more open to creating digital versions of their currencies, which he said could offer significant benefits to society.
As in other countries, Switzerland’s biggest financial institutions hope to develop applications using the blockchain distributed ledger technology behind bitcoin, but have steered clear of facilitating new cryptocurrencies or ICOs.
Mr Lacher confirmed that SIX Group would maintain that trend. “We have actually no plans to admit trading of cryptocurrencies or ICOs. But we see a lot of advantages for blockchain across our businesses,” he said.