According to the promoters, the cryptocurrency definitely belongs in the currency reserves. With Bitcoin, Switzerland could secure its independence and neutrality. You will receive funding from a renowned monetary policy expert.
The Swiss National Bank (SNB) has always been a projection surface. For example, for gold fanatics, climate lobbyists or politicians on the left or right edge of the spectrum who would like to distribute “excess” currency reserves to their clientele. Shortly before his end in office, SNB boss Thomas Jordan will now also have to deal with a special kind of activist: Bitcoin fans.
A group led by the French-speaking Swiss crypto evangelist Yves Bennaïm is launching a popular initiative that wants to add two small but meaningful words to a constitutional article. Today it says: “The Swiss National Bank creates sufficient currency reserves from its income; part of these reserves is held in gold.” In the future it will be called “in gold and Bitcoin”.
The advantage of such a simple formulation is that it allows the SNB to determine the scope of such an investment itself. You can also just hold one franc in Bitcoin, says Bennaïm. So you don’t need to be afraid of your popular initiative.
Start a debate
The primary goal is to initiate a debate. Bennaïm is concerned about Switzerland’s future in an increasingly uncertain world. It is important to take the necessary steps to “protect our sovereignty and neutrality”.
“We are in the process of completing the organizational preparations for the committee and preparing the documents that must be submitted to the State Chancellery in order to start the process,” says Bennaïm, who is also a board member of the Bitcoin Association Switzerland industry association.
Bennaïm is receiving support from Luzius Meisser, who, among other things, is president of the asset manager Bitcoin Suisse: He will also be beating the drum for Bitcoin as a reserve currency at the SNB’s general meeting next Friday – he will have the usual 3 minutes of speaking time.
«Of course my request to speak also has a marketing component. But I really believe that Bitcoin should be part of Switzerland’s currency reserves,” says Meisser. This digital asset is more robust in the long term than euro and dollar investments, whose economies tend to use inflation to reduce their mountains of debt and thus also devalue the SNB’s investments.
Like Bennaïm, Meisser also argues with independence: “By including Bitcoin in its reserves, Switzerland would mark its independence from the European Central Bank. Such a step would strengthen our neutrality.”
Switzerland could be 30 billion francs richer
Meisser is a repeat offender. Together with other shareholders, he made the suggestion at the 2022 general meeting that the SNB should buy Bitcoin for 1 billion francs a month – at the expense of German government bonds. “If she had done this, Switzerland would be around 30 billion francs richer today,” says Meisser. He also wants to present this bill next Friday.
Meisser believes that the SNB generally looks at such issues soberly. However, timing is important when making investment decisions. It’s worth being one of the pioneers, says Meisser, referring to the recent history of the National Bank.
“At the turn of the millennium, the SNB divested itself of a large part of its gold reserves at the worst possible time, after a number of other central banks had already done so and the price of gold had reached its lowest point in decades.”
If it gets to grips with Bitcoin too late and other central banks get ahead of it, it risks “having to get in at significantly higher prices than everyone else,” says Meisser.
Of course, Bennaïm and Meisser will break open doors with their demands in the rapidly growing crypto valley. But not only there: parts of the traditional financial industry have long since jumped on the bandwagon. Finally, even customers of Postfinance or some cantonal banks can now buy Bitcoin. And in Lugano you can now pay your taxes in Bitcoin and other cryptocurrencies.
It is hoped in the industry that the recent approvals for Bitcoin investment vehicles, for example in the USA or Hong Kong, will influence the SNB. «Two years ago there was no clarity about the legal status of Bitcoin, especially in the USA. The US Securities and Exchange Commission has now classified this cryptocurrency as a commodity, and Bitcoin is now an integral part of the traditional financial system,” says Leon Curti, head of research at asset manager Digital Asset Solutions. This legitimation may make it easier for the National Bank to decide to invest in Bitcoin.
From a scientific perspective, it is clear that investing in an asset that has such a low correlation to other investments has a positive diversification effect. Curti also hopes for an advertising effect for the local location. “Even a small Bitcoin investment by the National Bank would have a major signaling effect and underline Switzerland’s reputation as a crypto nation.”
The cause even enjoys sympathy among some scientists. For example, with Gunther Schnabl, who heads the Institute for Economic Policy at the University of Leipzig and was previously an advisor to the European Central Bank. “Currency reserves are traditionally held in government bonds, which are considered the safest form of investment. “But national debt has risen sharply in most industrialized countries, so the risk of default has increased,” he says.
The risk of payment defaults increases
Defaults could materialize in the form of default, inflation or financial repression. This could even flourish in his home country. Germany has relatively low national debt and a debt brake. But there are risks because the euro area is inherently unstable, says Schnabl.
In the USA, national debt is rising particularly quickly, which is damaging confidence in the dollar as the world’s reserve currency. “In an increasingly unstable global monetary system, Bitcoin as an asset could contribute to risk diversification in the SNB’s foreign currency reserves,” said the monetary policy expert.
Two years ago, Thomas Jordan responded to Meisser’s suggestion that “from today’s perspective” Bitcoin does not meet the requirement for currency reserves. The SNB does not want to comment on whether the ruling at that time still applies.
