Switzerland’s Federal Council has recently requested a study on the risks and benefits of launching its own cryptocurrency, a so-called “e-franc.” The cryptocurrency would be backed by the state, and would use technology “similar” to that of bitcoin, presumably blockchain technology.
According to Reuters, the Federal Council is set to investigate the proposal after it was brought forth by Swiss lawmaker and Social Democratic Party vice-president Cedric Wermuth. In response, the Federal Council backed the proposal, but noted there were potential hurdles.
“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.”
Now, the lower house of the Swiss parliament has to decide whether or not to back the Council’s request for the study. If it does, the Swiss Finance Ministry will look into the subject. No timeframe has been revealed.
While cryptocurrencies have been drawing scrutiny from lawmakers throughout the world, the idea of a state-backed cryptocurrency isn’t new. Sweden’s Riksbank has argued an “e-crown” could help the country battle issues arising from declining cash use, while helping improve payment systems.
Venezuela, a country struck by one of the deepest recessions ever, has notably launched an oil-backed cryptocurrency called the Petro, which some argue is a way for the government to bypass international sanctions and get its hands on foreign investments.
In Switzerland, the idea of an “e-franc” was first put forward this year by Romeo Lacher, chairman of Swiss stock exchange SIX. At the time he claimed an e-franc under the central bank’s control would help “create a lot of synergies,” meaning it “would be good for the economy.”
The Swiss National Bank has, however, been cautious. As Reuters points out, the financial institution’s governor Andrea Maechler has stated that private-sector cryptocurrencies were “better” and “less risky” than any state-backed cryptocurrency would be.
Switzerland is often seen as a safe haven for cryptocurrency-related projects, as the country supports the innovations they bring. As covered, earlier this year the country’s financial supervisor, the Financial Market Supervisory Authority (FINMA) published guidelines in support of initial coin offerings (ICOs).