Switzerland’s central bank rejects calls to add bitcoin to its reserves, citing concerns over market liquidity and volatility. As the price of bitcoin continues to fluctuate, some experts argue that a strategic investment could yield substantial returns.
The Swiss National Bank (SNB) has rejected calls to add bitcoin to its reserves, citing concerns over cryptocurrency market liquidity and volatility. SNB President Martin Schlegel stated that cryptocurrencies do not fulfill the high requirements for currency reserves.
Liquidity and Volatility Risks
Schlegel emphasized that market liquidity, even during times of stability, is called into question during crises. He also highlighted the high volatility of cryptocurrencies as a risk for long-term value preservation. The SNB’s investments have grown by about 10% since 2015, while a 1% bitcoin allocation would have nearly doubled returns over the same period.
The Bitcoin Initiative’s Perspective
In contrast, the Bitcoin Initiative, a bitcoin advocacy group, argues that adding bitcoin to Switzerland‘s treasury would complement its overall portfolio and yield substantial returns with minimal volatility. Luzius Meisser, a member of the initiative, noted that bitcoin‘s price has reached new highs, shown resilience under market stress, and remains highly liquid.
Bitcoin is a decentralized digital currency that allows for peer-to-peer transactions without the need for intermediaries.
Created in 2009 by an anonymous individual or group using the pseudonym Satoshi Nakamoto, Bitcoin uses cryptography to secure and verify transactions.
The total supply of Bitcoin is capped at 21 million, making it a scarce asset.
As of 2022, Bitcoin has become increasingly popular as a store of value and investment vehicle.
Global Central Banks’ Stance on Bitcoin
European Central Bank President Christine LaGarde has consistently criticized bitcoin, calling it ‘worth nothing‘ and a ‘highly speculative asset‘ linked to money laundering. Other central banks, such as the Czech National Bank and Romania’s central bank, have also ruled out adding bitcoin to their reserves.
Indirect Exposure through Stocks
The Swiss National Bank has indirect bitcoin exposure through stocks that own corporate bitcoin treasuries, including shares of Strategy, Tesla, and MARA Holdings.
- coindesk.com | Swiss National Bank Rejects Calls to Add Bitcoin Reserves
