SNB’s Jordan Expressed Threat From Foreign Stablecoins To Switzerland’s Monetary Policy
Thomas Jordan, Chairman of Swiss National Bank, disclosed his worries regarding the stablecoins. He said that Switzerland’s monetary policy could be affected due to the stablecoins like Facebook led Libra cryptocurrency as they are linked with a group of stable currencies.
He said, “the Swiss franc would not create any risk; however if the stablecoins pegged to foreign currencies were to establish themselves in Switzerland, the effectiveness of our monetary policy could be impaired.”
While speaking at the University of Basel, he further expressed his concern that” cryptocurrencies are meant to have limited use as payment instruments, units of account and stores of value and thus are subjected to have major fluctuations.”
“We don’t see this as an immediate threat to our financial stability, but the open-access of central bank-issued virtual forex to the common public could create hindrance to the national monetary policy as it multiplies a chance of a financial institution run.”
Facebook’s plans to launch a stablecoin Libra is causing turmoil among the bankers and financial regulators across the globe. Moreover, it has chosen Switzerland for launching its Libra project.
Switzerland has blockchain-friendly policies along with stringent federal laws about data privacy and data protection. Owing to this approach, Facebook has launched a company called “Network Libra” in Geneva in May. This has created an atmosphere of ambiguity in the financial sector of Switzerland.
The Libra project is facing a growing chorus of resistance across the borders, including Trump administration.
It also has created chaos among European officials that Libra could harm sovereign currencies and could undermine European banks which could lead to the financial crisis.
The recent statements of Thomas Jordan resonances similar concerns. However, David Marcus, The head of the Libra project had assured in July that it wouldn’t compete with sovereign currencies or won’t interfere in monetary policies.