The Swiss National Bank (SNB) is proving to be just as stubborn in their skepticism of Bitcoin. In a world literally racing towards a more digital future, holding onto old, tired financial models is a one-way journey to becoming irrelevant. A successful referendum urging the SNB to start holding Bitcoin on its balance sheet. Good. Considering the history of innovation and neutrality that created Switzerland’s strategic advantage, it’s high time they step toward the future of finance.
Volatility? Controlled Chaos Is Opportunity
The SNB’s favorite chestnut, and main reason given in snb.ch for rejecting Bitcoin, is that its too volatile. I say, so what? In fact, volatility is a feature, not a bug—in particular in the nascent, early-adopter phase of a wildly disruptive technology. It presents unparalleled opportunities for strategic accumulation. Look at any groundbreaking innovation in history – the printing press, the internet, the smartphone – all experienced periods of intense volatility before achieving widespread adoption.
Think of it like this: you wouldn't dismiss a promising tech startup because its stock price fluctuates wildly in its first few years. You’d undertake its possible use case, its development team, its underlying tech. Bitcoin is the same. Dismissing it just because of short-term price swings is pretty shortsighted. Let's be honest, the traditional financial system isn't exactly a paragon of stability these days, is it? Just ask the victims of the recent banking crisis; that was volatility of a much more perilous sort.
Liquidity? Deeper Than You Think
Liquidity concerns are another SNB talking point. Second, they suggest that purchasing or selling significant quantities of Bitcoin may be difficult. Such trades can have a disproportionate impact on price. This argument is increasingly outdated. As I have written here and here, in recent years, the Bitcoin market has matured greatly. With more institutional investors and therefore more sophisticated trading platforms, the crypto landscape now features deeper liquidity than ever.
Consider this unexpected connection: the global art market. High-end art works, generally worth millions of dollars, tend to be extremely illiquid. Central banks are uniquely positioned to hold gold, which, arguably, suffers from the liquidity problem at the massive order size. The bottom line is smart management and a long-term outlook. Bitcoin’s liquidity isn’t getting any worse, that’s for sure, with global adoption continuing to grow at an accelerating pace.
Security? Software Has Patches, Gold Has Raiders
We wouldn’t expect SNB Chairman Martin Schlegel to underestimate the idea that Bitcoin is “software” prone to crashing, but this one’s pretty easily dismissed. Everything is software these days. That may seem harmless in the grand scheme, but the entire global financial system rests on complex code. The difference is that unlike traditional banking systems, Bitcoin’s code is open-source, transparent and regularly audited by a global community of developers.
Don’t get us started on the security concerns that come with physical assets. Gold vaults can be raided, fiat currencies can be counterfeited and banks can be hacked. Bitcoin’s security comes from cryptography and decentralization, which arguably makes it more secure than most traditional assets. While software bugs can eventually be worked out, the core vulnerabilities of highly centralized systems are much more difficult to overcome.
Diversification? Escape Dollar's Clutches
Concurrent with this the world is moving into a multipolar economic order. Leaving all our eggs in the dollar and euro baskets is becoming more dangerous. Passing a referendum to amend the Swiss constitution to make the SNB hold Bitcoin would be nothing short of audacious. It’s a step we must take to build a better future. It’s about financial sovereignty. It's about reducing reliance on any single nation's monetary policy, especially in times of global uncertainty and trade wars.
Bitcoin presents an incredible opportunity to both diversify the SNB’s assets and hedge against its extensive exposure to geopolitical risks. It’s a hedge against inflation, a store of value free from the influence of any government or central bank.
Innovation? Switzerland Must Lead, Not Lag
From time to time the little country of Switzerland shows the world what finance and technology can be. The Swiss DLT Act and the SNB’s own CBDC experiments show this willingness, but a desire to experiment with and embrace digital assets. These initiatives are not enough. It is time for the SNB to take an even bigger step and formally adopt Bitcoin as a new class of legitimate asset.
Consider, for one moment, the signal this would send to the rest of the world. This move would further cement Switzerland’s leadership role as a pro-innovation ecosystem in the burgeoning digital asset space. It would further attract investment and talent to the country. Ignoring Bitcoin is not just a missed opportunity. It's a strategic blunder that could undermine Switzerland's long-term competitiveness. As such, the SNB is conducting proofs of concepts of various digital currency projects, including a pilot program based on a wholesale central bank digital currency. Why not push this further?
The future is now. For once the SNB needs to admit their skepticism and accept the promise that Bitcoin offers. It’s not just an issue of profits, it’s Switzerland’s future at stake in a changing world.
