Swiss National Bank Warns of Complications in Stablecoin Monetary Policy

The Swiss National Bank (SNB) has warned that the proliferation of large stablecoins could complicate the transmission of monetary policy by central banks. Petra Chudin, a member of the SNB Board, explained that if stablecoins are not sufficiently connected to the existing financial system, the implementation of central bank policies could become complicated. However, she also acknowledged the potential for stablecoins to lower international remittance costs and promote innovation in the existing financial system. The SNB maintains a cautious stance on stablecoins and digital assets, pointing out the risk that stablecoins may not always guarantee redemption at the promised face value. Currently, the trading volume and usage level of stablecoins in Switzerland are low, and the risks to financial stability are assessed to be minimal. The SNB is also conducting experiments with central bank digital currencies (CBDC) and has initiated a project to issue blockchain-based digital currencies to banks since three years ago. This project is expected to continue at least until 2028. The SNB stated that for retail CBDCs focused on consumer use, the risks outweigh the expected benefits.

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