Category Archives: e-franc

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Global State Bank Crypto Adoption Still in Its Infancy

With banks increasingly switching on to the current global interest in cryptocurrencies, digital currencies are now being utilized by the same institutions they were designed to subvert, writes Cointelegraph.

More and more banks around the world see blockchain as a panacea to banking issues, all long overdue for improvement and update. They are realizing that, due to today’s already digitalized banking, which has changed the nature of payment and storage of monies, the technology behind Bitcoin clearly has a place within global financial systems.

Only a fraction of money is paper money bills in circulation, and current digital systems lack speed, stability and security. This, coupled with customer demand, as in the case of Goldman Sachs’s adoption of a digital dollar recently, is driving many nations to consider or actively support central bank cryptocurrency.

Governments and central banks from India, Japan, Canada, Russia, Switzerland to Singapore and the Marshall Islands are all currently looking into a government-backed digital currency. Several other governments, including China, Estonia, and Iran, have discussed plans for their own digital currency. Of these, the Marshall Islands have taken one step further and plan to issue its own cryptocurrency that will be circulated as legal tender along with the US dollar.

Singapore has project UBIN and the Bank of Canada has Project Jasper, while the United States is toying with the idea of a FedCoin. Last year, in the Middle East, the Bank of Israel was considering a digital Shekel.

In Sweden, many retail stores no longer accept paper money and some Swedish bank branches no longer disburse or collect cash. In response, the Riksbank has a current project in progress examining the viability of an e-Krona for retail payments.

Crypto-friendly Switzerland is looking towards the viability of a Swiss National Bank (SNB) e-Franc, but has little support within the Swiss government. The often controversial Venezuelan Petro, seen as both an economy saver and possible sanction breaker, was launched in February 2018 to supplement the plummeting bolivar fuerte, reportedly backed by the nation’s oil reserves.

In Russia, deputy minister of economic development Oleg Fomichev suggested the proposed CryptoRuble, conceived in a climate of heavy anti-crypto sentiments regarding adoption by private companies but nonetheless in state hands, becoming another powerful sanction breaker in the current political climate. Russian president Vladimir Putin stated that the Stone Age has not ended because humanity has run out of stones, but because new technologies have appeared.

“If if central banks were to back cryptocurrencies, the central banks would be better positioned to predict money demand and therefore adjust supply accordingly,” writes Mohamed Damak of S and P Global, adding, “It is still too early to tell in which direction this instruments will move.”

Alternatively, he writes, “If cryptocurrencies were to take off and become an effective currency issued in a decentralized manner, the impact on monetary policy implementation would be deep, since central banks might lose their ability to control the money supply.”

It is a view more closely aligned to Satoshi Nakamoto’s original vision.

 

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Switzerland Considers National Digital Currency ‘e-franc’

The Federal Council of the Government of Switzerland is considering the establishment of a national digital currency called the e-franc, with Reuters reporting Thursday a study has been requested into the possibility of its establishment.

The e-franc would utilize blockchain technology while operating under the jurisdiction of the Swiss state. The Federal Council requested the report, prompted by the vice-president of the Social Democratic Party, Cedric Wermuth. The motion is currently waiting for approval from the lower house of the Swiss Parliment before it can proceed.

The Federal Council commented on the study, saying: ”[The Council] is aware of the major challenges, both legal and monetary, which would be accompanied by the use of an e-franc. 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.”

The initial idea behind developing the state-backed cryptocurrency came from the chairman of the Swiss stock exchange SIX, Romeo Lacher. As reported by Cointelegraph, Lacher shared his positive sentiments of such a digital currency, saying “An e-franc under the control of the central bank would create a lot of synergies – so it would be good for the economy.”

While no timeframe has been provided regarding the period it will take for the lower house to come to a decision, should it be approved, the Swiss Finance Ministry will be responsible for coordinating the study.

Crypto in Switzerland

This news has come as somewhat of a surprise considering Switzerland’s largest bank UBS [SIX: UBSG] declined to facilitate Bitcoin trading earlier this month. Axel Weber, chairman of the bank, shared his negative perception of cryptocurrencies in a statement calling for stricter regulations. “[Cryptocurrencies] are often not transparent and, therefore, open to being abused,” he said.

Andréa Maechle, Board Member of the Swiss National Bank, last month expressed his view on nationally issued digital currencies, citing them as inferior to their private sector counterparts. Maechle noted that government-issued cryptocurrencies have an increased risk of bank runs- when a large number of customers of a bank or another financial institution withdraw their deposits simultaneously due to concerns about the bank’s monetary holdings.

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