Swiss National Bank Turns Down Proposal to Include Bitcoin in Reserves

The Swiss National Bank has opted not to hold bitcoin reserves due to concerns about the cryptocurrency market's liquidity and volatility. At the bank's General Assembly meeting, SNB President Martin Schlegel stated, "The market liquidity of cryptocurrencies, even if it appears sufficient at times, is particularly questionable during crises. Additionally, cryptocurrencies are known for their high volatility, which poses a risk to long-term value preservation. In essence, cryptocurrencies currently do not meet the stringent requirements for our currency reserves." Schlegel's comments were in response to the Bitcoin Initiative, a bitcoin advocacy group that suggested adding bitcoin to Switzerland's treasury would complement its portfolio and yield substantial returns with minimal volatility. According to a simulation by the Bitcoin Initiative, a 1% bitcoin allocation to the central bank's portfolio would have nearly doubled returns since 2015, with only a slight increase in annualized volatility. The Swiss National Bank's investments have grown by about 10% since 2015 without bitcoin. The Bitcoin Initiative argues that bitcoin's volatility should be evaluated in the context of its impact on the overall investment portfolio. The group also emphasized bitcoin's resilience under market stress and its high liquidity, with daily trading volumes in the double-digit billions. In contrast, the European Central Bank President Christine LaGarde has criticized bitcoin, calling it "worth nothing" and a "highly speculative asset" linked to money laundering. The Swiss National Bank has indirect exposure to bitcoin through stocks that own corporate bitcoin treasuries. Despite this, SNB President Martin Schlegel has rejected calls to add bitcoin reserves to the central bank's coffers, citing concerns over liquidity and volatility risks.