Swiss Central Bank head criticizes the idea of creating a BTC reserve due to liquidity and volatility risks

What’s new? The Swiss National Bank has rejected the idea of creating a national strategic bitcoin reserve, citing concerns about the liquidity of the crypto market, which could drop significantly if a crisis occurs. “Cryptocurrencies also are known for their high volatility, which is a risk for long-term value preservation. In short, one can say that cryptocurrencies for the moment do not fulfill the high requirements for our currency reserves,” explained President Martin Schlegel during the April 25 meeting.

Material by CoinDesk

What else is known? The comments followed the publication of a study by the cryptocurrency lobbying organization Bitcoin Initiative, according to which the addition of BTC to the treasury of Switzerland will allow diversification of the portfolio and bring substantial returns with minimal volatility.

Without bitcoin, the Swiss National Bank’s investments have grown by about 10% since 2015. According to the Bitcoin Initiative model, allocating 1% of the portfolio to the first cryptocurrency would have resulted in almost double the return over the same period, while annualized volatility would have increased only slightly.

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The organization’s analysts also stressed that bitcoin volatility should not be evaluated in isolation but in terms of its impact on the overall dynamics and efficiency of an investment portfolio.

Bitcoin Initiative member and Bitcoin Suisse board member Luzius Meisser reminded that the Bitcoin network is one of the most reliable and secure IT systems. BTC itself earlier this year hit an all-time high, demonstrated resilience in the face of market stress, and remained a highly liquid asset with trading volumes totaling billions of dollars, including during the holidays.

He also recalled that the United States has already started to create cryptocurrency reserves. The corresponding decree was signed by President Donald Trump in early March.

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In comments to CoinDesk, representatives of the Bitcoin Initiative suggested that the Swiss National Bank’s rejection of bitcoin may have political reasons: the creation of a crypto reserve could be perceived as “an expression of distrust towards other currencies” and harm Switzerland’s delicate relations with the EU.

In particular, bitcoin is actively criticized by the president of the European Central Bank (ECB) Christine Lagarde. She has stated that bitcoin is a highly speculative asset with no value and is actively used for money laundering. Earlier this year, she expressed confidence that BTC would not be accepted as a reserve by any EU central bank.

The statement came in response to the news that the Czech Central Bank was studying the possibility of creating a bitcoin reserve. In turn, in February, the idea was rejected by the Central Bank of Poland, and the Central Bank of Romania called on banks not to issue loans to crypto firms.

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At the same time, the Swiss National Bank has indirect access to bitcoin through the ownership of shares in companies that accumulate the asset on their balance sheet. Specifically, the central bank held 520 000 shares of Michael Saylor’s Strategy, 8,12 million shares of Tesla, 580 000 shares of the world’s largest US-based miner Marathon Digital, and 500 000 shares of leading miner CleanSpark at the end of last year.

Although Bank Governor Schlegel rejected the idea of a bitcoin reserve, the Central Bank will soon launch a pilot project using national cryptocurrencies/central bank digital currencies (CBDCs) to facilitate payments between financial institutions.