If it's stablecoins, then please use Swiss francs
The rapid growth of stablecoins as well as international initiatives to regulate them have prompted many sceptics to reconsider their benefits and acceptance. Where rejection and resistance once prevailed, the focus is now on rules for issuing and using stablecoins in a legally secure manner. The view that stablecoins are here to stay appears to be gaining traction, as shown by a number of projects from traditional financial market players. For example, SWIFT, the global network used by banks for international payments, wants to create a blockchain-based infrastructure or “shared ledger” to transfer tokenised assets internationally.
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Programmable stablecoins can be transferred in real time around the clock and can be used to link a payment to the provision of a service. This is especially useful for cross-border payments and settling complex financial contracts, for instance as part of a long supply chain. The programmability of stablecoins also means that devices connected to the Internet of Things and artificial intelligence agents can execute payments independently. In addition, it allows anti-money laundering checks to be automated and makes it possible to verify that specific wallets and recipients meet the “know your customer” requirements.
Given that these advantages have been known about for years and the stability risks are still as pertinent as ever, the opinion shift in favour of stablecoins in such a short space of time comes as something of a surprise. In its expert report “Stablecoins in Switzerland”, published in April 2025, the Swiss Bankers Association (SBA) offered a detailed explanation of the stability and disintermediation risks from the banks’ perspective. Issuing stablecoins with a stable value can influence the length and structure of banks’ balance sheets and thereby impair their ability to transform maturities and risks. As a result, the business models banks use today will probably have to be rethought if stablecoins become widely used.
With the Trump administration paving the way for USD stablecoins to finance government spending and strengthen the dollar’s status as the world’s reserve currency, these same risk considerations could make a case for issuing CHF stablecoins from Switzerland. The burning question here is this: in the absence of CHF stablecoins, which means of payment would their potential users resort to instead?
If they could successfully employ traditional payment methods, the direct impact of that absence would not be severe. A different picture emerges if the growth of the digital economy leads to money flowing out of Swiss bank accounts and into foreign-currency stablecoins. This money would then be removed not only from the banks’ balance sheets, but also from the Swiss monetary system as a whole via the balance of payments.
A CHF stablecoin could avert this risk. Depending on how it is designed, it might not make it possible to refinance all loans on the same terms as before, but it would at least mitigate the threat of financial system erosion. The proceeds from underpinning a stablecoin with high-quality, liquid CHF securities and possibly also from sales of the stablecoin on the secondary market would then flow back to the banks in the form of deposits. The same is true if central bank deposits are used as underpinning, since stablecoin issuers would also sell securities in this case. When a customer sells stablecoins, the proceeds flow directly into his or her bank account and remain within the banking infrastructure holding the reserves.
If stablecoins are underpinned with bank deposits, meanwhile, the risk of disintermediation is fully mitigated. These factors concern the system as a whole. An individual bank’s exposure to stablecoin risks depends on its business model. As knowledge of the benefits stablecoins can bring for bank customers grows, financial institutions and supervisory authorities must make market-driven solutions possible.
At present, however, such considerations are moot for Switzerland as scalable issuance of stablecoins is, de facto, not possible here. If Switzerland wishes to keep open the option of assuming a leading role in stablecoins, a legally secure framework must first be created. The Federal Council has acknowledged this and opened a consultation on draft legislation in this area. This is intended to give financial intermediaries scope to structure their offering in Switzerland such that it is sufficiently functional and resilient to risks to ensure that users favour stablecoins issued here in Swiss francs over their foreign competitors.
Dr Martin Hess is Chief Economist and Head of the Digital Currencies project at the Swiss Bankers Association.