Ditching Bitcoin: Switzerland's National Bank Turns A Blind Eye
Banking Authority of Switzerland's Chief Rejects Adoption of Bitcoin
Martin Schlegel, the big cheese at the Swiss National Bank (SNB), ain't buying the idea of spicing up the nation's reserves with Bitcoin, according to Reuters.
Schlegel threw some serious shade on the digital currency, pointing to its flaky volatility as the main reason. He's adamant that Bitcoin ain't got what it takes to meet the requirements for the country's reserves.
U.TODAY reported back in December about a new initiative to revamp the Swiss constitution and diversify the bank's assets with Bitcoin. For this proposal to make it to the Swiss parliament, it needs a total of 100,000 signatures before June 30. Last year, a similar initiative took a nose-dive, but Bitcoin enthusiasts remain hopeful that the US's pro-crypto stance could sway Switzerland.
Switzerland's known as a haven for cryptos, but it might not go all in and amend its constitution just to cop some Bitcoin.
The SNB's reserves tower over $900 billion. Most of these funds are stashed away in foreign exchange reserves, which are mindbogglingly diversified across the US dollar, the Japanese yen, and other currencies. The bank's gold reserves sit at $94 billion.
No Domino Effect
After the US established a strategic Bitcoin reserve in March, some crypto fans thought it might start a domino effect, with other bigwig economies jumping on the Bitcoin bandwagon. But major economies like Japan have been hesitant about embracing Bitcoin. U.TODAY reported that the European Central Bank (ECB) President Christine Lagarde shut down the idea of EU central banks stockpiling Bitcoin in their reserves.
It's unclear whether the US will buy Bitcoin itself, given that the highly-hyped Strategic Bitcoin Reserve will initially only contain forfeited coins.
#Bitcoin News
The Swiss National Bank ain't impressed with Bitcoin's flaky market liquidity, especially during financial crises. Although Bitcoin can exhibit high liquidity at times, it's not always dependable, especially in demanding market conditions. This inconsistency is a significant concern for the bank, which needs stable liquidity to manage its reserves efficiently for speedy foreign currency transactions[1][3][5].
The bank's also got a bee in its bonnet about Bitcoin's price volatility, which could wreak havoc on the currency's long-term worth. This instability makes it tough for the SNB to confidently include Bitcoin in its reserves, as reliable, steady assets are essential for financial security and maintaining the Swiss currency's stability[1][3][4].
The SNB values stability and security in its reserves, but Bitcoin's unpredictable nature and the risks associated with its market fluctuations do not align with the quality standards the bank demands for its currency reserves[2][5].
Although the SNB doesn't have Bitcoin in its direct holdings, it's got an indirect connection through investments in US firms that keep Bitcoin in their corporate treasuries, like Strategy, Tesla, and MARA Holdings. This sneaky little arrangement lets the SNB reap the potential benefits of Bitcoin's growth without straight-up incorporating it into its reserves[1].
Some believe that a meager allocation of Bitcoin could boost returns without significantly boosting volatility. However, the SNB sticks with traditional assets that offer stability and reliability[3][5].
- Despite the US establishing a strategic Bitcoin reserve, major economies like Switzerland, led by the Swiss National Bank (SNB), remain hesitant to amend their constitution to cop some Bitcoin.
- Martin Schlegel, head of the SNB, is critical of Bitcoin's flaky market liquidity, particularly in demanding market conditions, which poses a significant concern for managing reserves efficiently.
- The SNB is also concerned about Bitcoin's price volatility, which could negatively impact the currency's long-term worth, making it difficult to confidently include Bitcoin in its reserves.
- To maintain financial security and the Swiss currency's stability, the SNB values stable liquidity and reliable assets, which Bitcoin, due to its unpredictable nature, does not align with.
- Although the SNB does not have Bitcoin in its direct holdings, it indirectly benefits from investments in US firms that keep Bitcoin in their corporate treasuries, such as Strategy, Tesla, and MARA Holdings.
