Swiss National Bank (SNB) President Martin Schlegel Rejects Holding Bitcoin Reserves

Swiss National Bank (SNB) President Martin Schlegel has rejected holding Bitcoin reserves, citing market liquidity and volatility as reasons for doing so.

Swiss National Bank (SNB) President Martin Schlegel has rejected the idea of holding Bitcoin reserves, highlighting market liquidity and volatility as key factors.

As reported by BTCport, Schlegel responded to an op-ed in Finanz und Wirtschaft by the Bitcoin Initiative, a group advocating for an SNB reserve, highlighting that SNB investments grew by about 10% since 2015. Using a back-of-the-envelope analysis, if the SNB added 1% of Bitcoin to its reserve, it would have nearly doubled its returns. Moreover, the volatility of the SNB portfolio would have only increased slightly.

The Bitcoin Initiative concluded that Bitcoin’s volatility should not be analyzed in isolation, but rather considered in conjunction with the other assets in the current portfolio. The Bitcoin Initiative further noted that Bitcoin was resilient to market stress, highly liquid even with large sums of capital, and remained available even on bank holidays.

However, Schlegel disagreed, saying a reserve needs a high level of liquidity to buy and sell foreign currencies at a rapid rate. He also reiterates that Bitcoin has very high volatility, making it difficult for the SNB to include it in its portfolio.

“We need to be able to maintain control over the reliability of the bank’s reserves,” Schlegel added.

The extremely high volatility of Bitcoin makes the currency a risky asset for the bank. SNB, therefore, maintains a conservative stance regarding cryptocurrencies, despite many advocates pushing for a Bitcoin reserve. There is a lot of interest in adopting a Bitcoin reserve in Switzerland. Yet, at this point, President Schlegel does not seem convinced about the suitability of Bitcoin for the Swiss bank.

The Bitcoin Initiative believes that the SNB should urgently consider a Bitcoin reserve to offset the risks caused by Trump’s tariffs. They believe that the bank should consider diversifying its reserves and include a currency that has been referred to as digital gold. A referendum campaign has started to change the constitution and force the SNB to hold both Bitcoin and gold reserves.

However, Schlegel remains firm with his strategy, saying that liquidity and volatility are factors that discount Bitcoin. He claims that the bank should be able to buy and sell currencies at any time.

“The units of the foreign exchange reserve are liquid, in the sense that they can be rapidly converted into other currencies or assets without loss of value,” Schlegel explained.

The SNB president previously opposed the idea of a Bitcoin reserve. Last month, he stated that the SNB has no plans to buy cryptocurrencies. He argued that foreign exchange reserves are strictly for implementing monetary policy.

Schlegel mentioned that crypto proves difficult to preserve value over time due to its significant price fluctuations. He also pointed out that crypto was software and could be prone to security risks such as data breaches and software bugs.

Time will tell whether the SNB will change its strategy or maintain a conservative approach focused on implementing monetary policy.