Around the world, the idea of a state-backed cryptocurrency is gaining momentum amongst authorities, who are seemingly open to embracing cryptocurrencies, given strict rules and regulations.
According to Reuters, the Swiss Federal Council has solicited a report that states the perils and scope of developing a native cryptocurrency. They have reportedly decided to term it as “e-franc,” an amalgamation of electronic francs – Switzerland’s currency.
In the government’s words, the only difference between the e-franc and bitcoin would be that of being backed by the state as a legal tender opposed to being “privately-backed.” Regardless, the underlying technology shall remain that of a publically-viewable blockchain.
It now remains for the Swiss parliament’s lower house to take a call on whether to support the Federal Council’s request for a report into the topic.
The development comes after a warning issued by Switzerland’s Bank of International Settlement (BIS) in March 2018 which appealed central banks to strongly consider prospective risks involved with introducing their own cryptocurrency.
In case the lower Parliament approves the report, the Swiss Finance Ministry shall produce a study. However, they have not given an exact time on when the publishing would commence, if the green signal is given.
The study was proposed by Vice President of the Social Democratic Party, Cedric Wermuth, who also oversees law-making in the country. Although a lot of obstacles are in its way, the Swiss government has supported this proposal, as stated in its response on May 17, 2018.
Furthermore, the report states that a substantial amount of legal as well as financial drawbacks existed with the introduction of e-franc, which the Federal Council is well acquainted with.
“It asks that the proposal be adopted to examine the risks and opportunities of an e-franc and to clarify the legal, economic and financial aspects of the e-franc.”
Thus far, the Swiss National Bank (SNB) has expressed caution on the matter. It is of the opinion that a privately-owned cryptocurrency was superior and less problematic than a state-backed digital currency.
Governments Continue to Grapple With Digital Assets
Owing to its unpredictable nature, cryptocurrencies have caused a lot of fuss among lawmakers and international governing bodies, alongside inviting major scrutiny.
The sudden skyrocketing price of digital currencies has also been a contributing factor, coupled with most mainstream news outlets focussing only on this aspect, instead of the underlying technology’s benefits.
However, 2018 has seen swift developments in the blockchain space, with companies from a variety of sectors implementing the technology across their functions.
A lot of nations are now rapidly following suit – conducting tests and evaluating a possible state-backed cryptocurrency.
Sweden’s Riksbank has stated that their digital currency, the “e-crown” might help towards preventing problems owing to the decline in use of cash and to facilitate sturdy payment systems.
Developed economies have mostly stayed out of the whole cryptocurrency arena but developing countries like Venezuela have issued their own state-backed coins.