“A stablecoin can be a valuable addition – under clear conditions”
Stablecoins are digital currencies that promise to maintain a stable value – for example, by being pegged to a traditional currency. But how stable are they really, and what does their introduction mean for the financial system? These questions are at the core of a new expert report published by the Swiss Bankers Association (SBA). Dr. Martin Hess, Chief Economist of the SBA, explains why the debate is more complex than it might first appear.
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Martin Hess: “Framework conditions must enable innovation while safeguarding stability and trust.”
Martin, the SBA has published a comprehensive expert report on stablecoins. What was the motivation behind this work?
The developments surrounding digital money and blockchain-based payment forms are progressing rapidly. As an industry association, we want to provide a nuanced view of what stablecoins could mean for the Swiss banking sector – highlighting both opportunities and risks. The goal was to offer a structured overview that can serve as a sound basis for further discussions.
The report analyses the potential implications of issuance by Swiss banks. What is the key takeaway?
A trusted Swiss franc stablecoin could, under certain conditions, contribute to the further development of the digital financial centre. Due to their regulation and supervision, banks would be particularly well suited to issue stablecoins that could earn the necessary trust of the general public – provided that the associated risks are properly addressed. Especially in terms of value stability, legal structure and financial market supervision, high standards must be met.
Where do you see concrete opportunities?
Stablecoins could open up new applications in an increasingly digital economy – in payment transactions, the settlement of digital assets, or decentralised financial services (DeFi). They could help reduce transaction costs and automate processes. In some contexts, such as international payments, significant efficiency gains are conceivable.
And what risks need to be considered?
The risks should not be underestimated. In particular, there is the risk of disintermediation: if bank deposits were largely replaced by stablecoins, it could impair banks’ ability to extend credit and weaken the effectiveness of monetary policy. There are also questions around financial system stability, market structure and risks related to money laundering.
Does the SBA advocate for the introduction of a Swiss franc stablecoin by banks?
The SBA does not take a position for or against a specific introduction. We deliberately refrain from recommending a particular course of action and instead present considerations about the prerequisites that would need to be met for a stablecoin to be stable, secure and trustworthy. The aim is to provide a fact-based foundation for political and societal discussions.
What are the next steps from the SBA’s perspective?
Further clarification is needed regarding the legal framework, asset backing, regulation, and the role of various stakeholders – including the central bank. It is crucial to set framework conditions that enable innovation while safeguarding financial stability and trust. We will continue to actively engage in this discussion.