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Swiss National Bank Economist States Blockchain is Unsuitable for CBDC

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Carlos Lenz, the chief economist at Swiss National bank (SNB), thinks that blockchain technology is unsuitable for a central bank digital currency (CBDC). 

For the uninitiated, Blockchain is a database that functions as a decentralized, immutable ledger for tracking and recording financial transactions. Most cryptocurrencies, including Bitcoin and Ethereum, use this technology to secure transactions.

Swiss National Bank Finds Blockchain Inefficient for Digital Franc

In an interview with Swiss newspaper Handelszeitung,  Lenz outlined that Switzerland’s central bank had no plans to roll out digital franc in the foreseeable future; although the SNB has been researching digital currencies through studies and pilot projects. According to Lenz, the current system “works well” and there’s no risk of a digital currency replacing the franc.

The economist admitted that a digital franc holds potential. For instance, he noted that “one could imagine a direct account with the National Bank. Not that we want to do that, but that would be the simplest form.”

He also suggested another solution for digital currencies based on blockchain that would operate without a central authority. However, he quickly pointed out that “blockchain is very inefficient,” and that it may not be an ideal solution.

Bankers Association (SBA) Highlights There’s No Need For Digital Currency

Until last year, SNB was still looking into the advantages of implementing a CBDC, while Thomas Moser, alternate member of SNB’s governing board had argued that blockchain technology is unnecessary for a digital currency since trust is already assured by the central bank.

The SBA has also expressed views similar to Moser’s stance. The association has emphasized that there’s no need for digital money in daily transactions. Martin Hess, an SBA employee, suggested that the subject is “highly topical”. But he added that a digital currency could pose a real threat to the banking system. However, Hess was certain that digital money would be widely implemented in the future and the main question is ” in what form.” 

Meanwhile, China is pursuing its CBDC with expediency and vigor. The country has been experimenting with decentralized ledger technology as the base for a digital yuan. Only a few days back, the People’s Bank of China completed paying salaries in digital yuan in the Xiong’an New Area.

READ  Fed Reserve to Take Another Step Towards Central Bank Digital Currency Development

#Central Bank Digital Currencies (CBDC) #Digital Franc #Swiss National Bank

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Source: https://www.cryptoknowmics.com/news/swiss-national-bank-economist-states-blockchain-is-unsuitable-for-cbdc

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