Will the Swiss National Bank Buy Bitcoin?

by James · April 7, 2023

The Vice President of the Swiss National Bank (SNB) Martin Schlegel has caused a stir in the Bitcoin community with a new comment on a TV interview. Schlegel was asked to complete the sentences of the Swiss presenter who said: “I’m considering Bitcoin…”. And Schlegel added: “a very interesting concept.”

Although this was his only statement on Bitcoin, it provides an interesting insight into the current view of the Swiss National Bank. The statement implies that SNB is curious about the technology and the potential use of Bitcoin. However, that doesn’t mean it supports or opposes BTC.

Still, the statement is notable because a US central bank (Fed) or the European Central Bank (ECB) could never admit that the number one cryptocurrency is an “interesting concept.” Instead, ECB President Christine Lagarde repeatedly referred to Bitcoin as “worth nothing” and a “speculative investment with no intrinsic value.”

Can the Swiss National Bank Invest in Bitcoin?

Remarkably, Vice President Schlegel’s comment is not the Swiss National Bank’s first comment on BTC. SNB CEO Thomas Jordan expressed his opinion on the possible addition of Bitcoin to the central bank’s foreign exchange reserves during the SNB’s general meeting in April 2022.

This was preceded by two open letters from the financial company Bitcoin Suisse, both of which promoted an investment in the cryptocurrency. The company asked to create a framework “to be able to obtain and hold Bitcoin for monetary and exchange rate purposes if necessary.”

SNB CEO Thomas Jordan responded to this proposal at the general meeting. As Reuters reported at the time, Jordan explained that BTC currently does not meet foreign reserve requirements. Therefore, he said, the SNB has decided not to keep BTC on its balance sheet.

However, Jordan also noted the prospect that the SNB could act quickly if this assessment were to change. “We can arrange the technical and operational conditions relatively quickly, once we are convinced that we must have Bitcoin on the balance sheet,” said the SNB head.

Thus, there does not seem to be a technical barrier to buying BTC. “Buying Bitcoin is not a problem for us, we can do it either directly or can buy investment products that are based on Bitcoin,” Jordan reiterated.

The Swiss National Bank is different

Unlike its American and European counterparts, the Swiss National Bank cannot use accounting tricks to embellish its balance sheet. SNB was founded as a limited liability company and therefore reports in accordance with current rules.

This means that the SNB cannot hide its losses by valuing government bonds it owns at cost rather than market price. What this means was demonstrated in March 2023, when the SNB presented its annual accounts.

As NZZ reported, the Swiss National Bank lost about two-thirds of its equity. The annual loss of 132.5 billion francs reduced the SNB’s equity by two-thirds, from 204.2 billion francs ($225.97 billion) to 65.8 billion francs ($72.81 billion).

At press time, the BTC price stood at $27,918. With today’s release of the US unemployment report, BTC could be in for a volatile Friday.