- Swiss National Bank (SNB) Chairman Thomas Jordan said there’s no need for a retail central bank digital currency (CBDC) at this point.
- The head of Switzerland’s central bank believes the potential risks of the technology still outweigh its perceived advantages.
No Need for a Retail CBDC
According to Reuters, Swiss National Bank Chairman Thomas Jordan shared that there’s no need to roll out a CBDC to the public yet during a speech on Monday at an event in Zurich, Switzerland. He emphasized that there are already better payment systems offered by the private sector for people and institutions, so it would be counter-intuitive to launch a retail CBDC with its present risks potentially outstripping its benefits.
“Consumers and businesses already have access to a wide range of efficient and innovative payment instruments offered by the private sector,” stated Jordan in response to the topic centering on retail CBDCs.
Switzerland’s central bank chair explained the financial instrument could disturb the status quo and could render far-reaching consequences for the finance sector.
“Retail CBDC could fundamentally alter the current monetary system and the role of central banks and commercial banks, with far-reaching consequences for the financial system,” Jordan explained.
Wholesale CBDC Not Out of the Picture
The stance of Jordan only applies to retail CBDCs though, and it does not encompass wholesale CBDCs or wCBDCs. Just last year, SNB successfully completed the cross-border trading of its wBDCs under “Project Mariana.” This was conducted in collaboration with the Bank for International Settlements (BIS) as well as the Swiss central bank’s counterparts in France and Singapore.
Despite the successful test of wCBDCs, Jordan had reservations based on what they discovered during the procedure. Among the concerns raised were the feasibility of holding digital Swiss franc currencies overnight and their process of remuneration. The determination of eligible financial institutions also came as an issue.
Sweden RiksBank on CBDCs
Sweden’s Riksbank similarly posed a warning about CBDCs in its recent report. Based on its research published on March 20, there are possible risks associated with unsynchronized data during offline payments.
Its main point of contention lies in the liquidity risks brought about by shadow wallets and intermediary nodes that run transactions between offline and online wallets. This is further magnified when multiple unsynchronized offline wallets are involved.
The resulting discrepancies between the offline and online balances could confuse users and create security issues along the way said the report.