In an exciting announcement for the crypto sphere, the government of Switzerland has formally requested a report into the potential risks and opportunities of launching its own state-backed virtual currency, the e-frank. The request now awaits approval from the lower house of the Swiss parliament. Should it be allowed to move forward, the Swiss Finance Ministry will be obliged to conduct an official study on the subject.
Romeo Lacher, Chairman of the Swiss currency exchange SIX, came up with the idea of a national cryptocurrency back in February. At that time he claimed that “An e-franc under the control of the central bank would create a lot of synergies – so it would be good for the economy.“
Although the Swiss National Bank responded that there‘s no need for e-frank right now, Mr. Lacher remained positive, saying that he “doesn’t like cash” and would be very supportive of the initiative.
It seems that the institutional outlook on cryptocurrencies has since softened as The Federal Council (a governmental body that requested the crypto study) stated that, “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.“
Even if the request is approved, there is no timeline on when the study would be published. Obvious hurdles such as possible security and volatility issues also stand in the way, although they could likely be avoided or at least significantly reduced simply due to the fact that e-frank would be backed by the fiat frank.
Venezuela has been a subject of controversy recently, after releasing its own national digital currency, called Petro. The opinion-dividing president Nicolas Maduro has claimed it would be backed by Venezuelan oil, as the country possesses largest oil reserves worldwide.
Nonetheless, the majority of crypto community has shied away from it so far, with Donald Trump even signing an executive order that forbids American citizens from using it. At least right now Petro is considered more of a way for the Venezuelan government to bypass US sanctions, rather than a viable digital virtual currency.
On the other hand, Switzerland seems to be leaning towards a path taken by Sweden. Its national bank Riksbank has been exploring the idea of e-krona for quite a while as the country is gradually moving towards a cashless society.
According to the official blog post of Riksbank, e-krona “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.“
Switzerland is among the friendliest countries in the crypto sphere globally as some of the most prominent blockchain companies and organizations are based in the Swiss Crypto Valley. The adoption of e-frank is by no means a foregone conclusion but should it materialize, the whole crypto industry will be massively elevated.