Popular initiative wants to oblige the Swiss National Bank to buy Bitcoin

A group of Swiss Bitcoiners intends to oblige the Swiss National Bank (SNB) to build up Bitcoin reserves alongside gold reserves in order to protect the country's sovereignty and neutrality.

By including Bitcoin in its reserves, Switzerland would mark its independence from the European Central Bank. Such a step would strengthen our neutrality.
_{Luzius Meisser, President of the financial services provider Bitcoin Suisse, told the NZZ}

As it stands today, the central bank's constitutional article states the following: "The Swiss National Bank shall create sufficient currency reserves from its earnings; a portion of these reserves shall be held in gold." The initiative calls for the addition of "and Bitcoin" to be added to this in future. The Neue Zürcher Zeitung (NZZ) reported.

This would leave it up to the SNB to decide how much Bitcoin it ultimately buys, despite the obligation. The SNB's Annual General Meeting is next Friday and the group would like to initiate a debate on the inclusion of Bitcoin in the central bank reserves.

We are finalizing the organizational preparations for the committee and drawing up the documents that need to be submitted to the State Chancellery to start the process.
Yves_{Bennaïm, board member of the industry association Bitcoin Association Switzerland told the NZZ}

Bennaïm explains to the NZZ that he is concerned about the future of Switzerland in an increasingly uncertain world. His fellow campaigner Luzius Meisser, together with other shareholders, has already proposed at the 2022 Annual General Meeting that the SNB should buy one billion Swiss francs worth of Bitcoin every month at the expense of German government bonds. Given the SNB's foreign exchange reserves of several hundred billion francs, this would not have been such a large investment.

"If it had done this, Switzerland would be around CHF 30 billion richer today," Meisser emphasizes to the NZZ. He announced that he would also present this calculation in his three-minute speech on Friday.

Of course, my speech also has a marketing component. But I really believe that Bitcoin should be part of the Swiss currency reserves.
_{Luzius Meisser told the} NZZ

Meisser believes that Bitcoin is more robust in the long term than euro- or US dollar-denominated assets because economies tend to devalue their debt through inflation. This devalues the SNB's reserves, which consist largely of government bonds, explains Meisser to the NZZ. He believes it is important for Switzerland to be a pioneer in this area so that other central banks do not get ahead of the SNB and cause it to fall behind.

Around 55% of the Swiss National Bank is a public company that is partly owned by the cantons and cantonal banks, but not by the federal government. The remaining shares are held by private individuals, who have voting rights but no significant influence over the Swiss money guardians. Moreover, this is not the first time that a group has tried to persuade the SNB to act in its interests. Last year, for example, climate activists hijacked the Annual General Meeting. In general, it happens time and again that a wide variety of interest groups demand that the SNB make surplus reserves available to their clientele.

However, putting some of the reserves into Bitcoin can make perfect sense for central banks. Not only to hold an asset that is potentially more profitable in the long term than government bonds or foreign currencies, but also to position themselves more independently of other nations. Although Switzerland's neutrality means it is unlikely to get into a dispute for the time being, the freezing of US government bonds held by Russia during the war in Ukraine may have given it food for thought.

An academic paper by Matthew Ferranti, a fifth-year PhD student at Harvard's Department of Economics, came to the conclusion that it makes sense for central banks to diversify into Bitcoin under normal circumstances. However, they should do so in particular if they are affected by sanction risks, according to the paper. Ferranti is also an advisor to Ken Rogoff, a former economist at the IMF and the Federal Reserve Board of Governors and currently a Harvard professor.

For some time now, the SNB has been buying equities as well as foreign currencies as part of its diversification strategy and to combat the appreciation of the Swiss franc. A strong franc against other currencies would only make Swiss products even more expensive for foreign countries and thus weaken the country's exports. This makes the SNB one of the few central banks that also focuses on equities, an unconventional asset class for central banks.

In 2022 and 2023, the SNB posted losses in the billions, although last year's loss of just CHF 3 billion was significantly lower than the previous year's loss of CHF 132.5 billion. The reasons for the record loss in 2022 were falling share prices, the appreciation of the Swiss franc and, in particular, the price losses on the SNB's large bond portfolio due to the interest rate hikes by the ECB and the US Federal Reserve.

In 2022, Thomas Jordan, Chairman of the Governing Board of the SNB, rejected the proposal to buy Bitcoin. The reason given was that "from today's perspective", Bitcoin did not meet the SNB's requirements for currency reserves and that there was no legal basis for buying Bitcoin. Meissler believes that the latter argument is no longer valid since the introduction of Bitcoin as legal tender in El Salvador.

A lot has also changed since 2022. For example, since the approval of Bitcoin spot ETFs, Bitcoin has become deeply rooted in the world's largest financial market, where the asset is classified as a commodity.

In general, it is not so far-fetched that the SNB could be one of the first central banks to take this step. The Swiss National Bank attaches great importance to diversification, and as an asset with little correlation to traditional asset classes, Bitcoin can make a good contribution to this. Luzius Meisser also believes that the SNB takes a sober view of such issues.

Moreover, Switzerland is open to Bitcoin per se. Postfinance, one of the largest financial institutions in Switzerland, and some cantonal banks already allow their customers to buy Bitcoin. In addition, citizens in the canton of Zug or the city of Lugano can pay their taxes with Bitcoin and Co.

It remains to be seen whether the popular initiative will be successful at the General Assembly next Friday. In principle, however, it is positive for Bitcoin that this discussion is increasingly coming up and that more and more people are engaging with Satoshi Nakamoto's creation.