Swiss Referendum To Oblige Bitcoin Holdings For Central Bank

A group of Swiss Bitcoin advocates led by Yves Bennaïm has initiated a referendum to amend the Swiss constitution in a way that would mandate the Swiss National Bank (SNB) to include BTC alongside gold in its currency reserves, as reported by local media.

The proposed amendment to the Swiss constitution is succinct yet significant. It seeks to modify the clause that currently mandates the SNB to “build up sufficient currency reserves from its earnings; part of these reserves shall be held in gold,” to now include “and Bitcoin.” This change, though minimal in wording, could usher a substantial shift in the fiscal management of the nation.

Will The Swiss Central Bank (Have To) Adopt Bitcoin?

Yves Bennaïm, a figure deeply ingrained in the Swiss crypto scene and a board member of the Bitcoin Association Switzerland, articulated that the initiative is not just about altering the reserve assets but is a strategic move to “protect our sovereignty and neutrality” in an uncertain global economy. According to Bennaïm, the aim is also to “initiate a debate” on the future financial direction of Switzerland.

Support comes from within the industry, notably from Luzius Meisser, President of the asset management division at Bitcoin Suisse. Meisser, who is set to present his case at the SNB’s Annual General Meeting this Friday, April 26 at 10 am CET, stated, “Bitcoin is more robust in the long term than euro and dollar investments, which are susceptible to inflationary pressures that could devalue the SNB’s investments.” He also noted that Bitcoin could serve as a declaration of Switzerland’s financial independence from major central banks like the European Central Bank.

The initiative has garnered attention from various sectors of the finance world. Leon Curti, Head of Research at Digital Asset Solutions, remarked on the evolving status of Bitcoin in global markets, noting that its classification as a commodity by the US Securities and Exchange Commission “is a legitimization that could ease the SNB’s transition towards including it in its reserves.”

From an academic perspective, Professor Gunther Schnabl, who leads the Institute for Economic Policy at the University of Leipzig and has previously advised the European Central Bank, supports the notion. Schnabl highlighted the precarious state of traditional reserve assets, stating, “Government debt has risen sharply in most industrialized countries, meaning that the risk of default has increased.” He advocates for Bitcoin as a viable tool for risk diversification within the SNB’s foreign currency reserves.

However, not all feedback is positive. Critics point to Bitcoin’s historic volatility and the regulatory uncertainties that still surround digital currencies. They argue that such characteristics might not align with the traditionally conservative strategies employed by national central banks.

Two years ago, Thomas Jordan, the outgoing SNB Chairman, had dismissed a similar proposal, stating that Bitcoin did not meet the requirements for currency reserves “from today’s perspective.” The SNB has yet to comment on whether its stance has changed in light of the new proposal and the evolving regulatory and economic landscape.

Luzius Meisser estimates that an aggressive buying strategy could have significantly enriched Switzerland’s reserves given past Bitcoin price appreciation. “If the SNB had commenced buying CHF 1 billion worth of Bitcoin every month starting in 2022, Switzerland could be around 30 billion francs ($32.9 billion) richer today,” Meisser claims, citing the strong performance of Bitcoin compared to traditional assets like German government bonds.

In Switzerland, any citizen can initiate a national referendum to amend the constitution, provided they gather 100,000 valid signatures from fellow Swiss citizens. The referendum, if successful, would not only impact Switzerland’s financial strategy but could also serve as a benchmark for other nations. As the SNB prepares for its upcoming Annual General Meeting, all eyes will be on how it addresses this unprecedented proposal.

At press time, BTC traded at $66,254.