Switzerland Must Keep Pace with Stablecoin Innovations
The Swiss franc must remain a Swiss franc, according to Hans Gersbach, co-director of the KOF Institute. While digital money has become widespread, not all digital currencies are created equal. The majority of money used today consists of digital bank deposits, which work well in Switzerland.
New technologies have enabled innovations that can't be achieved under the current system: round-the-clock payments, cross-border transactions without intermediaries, programmable payments, and direct settlement on digital platforms.
Stablecoins are a type of digital token pegged to an existing currency, usually the US dollar. They promise to maintain face value, unlike Bitcoin's price fluctuations. Stablecoin issuers hold reserves to back up their claims, such as bank deposits or short-term government bonds.
The US is promoting stablecoins aggressively, with a geopolitical dimension: it could strengthen the dollar's international role and boost demand for US government bonds. However, Switzerland doesn't need to artificially boost demand for the franc, which often sees upward pressure in times of crisis.