Bitcoin at the SNB: a false good idea

An illiberal project for a liberal currency.

I can hardly hide my enthusiasm for bitcoin, given my many articles, conferences and even my book. Yet I'm not crazy about the popular initiative to include this cryptoasset in the reserves of the Swiss National Bank (SNB). What's got into me?

Leave the SNB alone

The SNB's objective currency stability (keeping the franc strong) and economic stability (keeping companies competitive). A mission more akin to a tightrope act than an academic method. If the franc is too strong, Swiss products become more expensive, and companies become less competitive.

Industrialized countries deliberately devalue their currencies to remain competitive. Whether this is done through exchange rates, as in the case of the China or the Japan. Or through key rates and «quantitative easing», as in the case of the U.S. Federal Reserve (FED) or the European Central Bank (ECB).

Long gone are the days when Airbus CEO growls at strong euro worth 1.36$ and reducing the Group's competitiveness against Boieng. The euro is worth 1$ today.

So what should we do? Devalue the franc to remain competitive, at the risk of losing confidence in the strong franc? Let the franc soar, at the risk of damaging exports? The SNB already has to square the circle. Why add bitcoin to the equation?

The SNB already has (too much) appetite for risk

One might be tempted to shake the SNB to dust it off. But you can't teach an old dog new tricks. Switzerland is the first central bank to turn away from gold and bonds in favor of trading on Nasdaq.

Far from contenting itself with stable stocks, the issuing bank bet on volatile shares such as Tesla and Nvidia, with some success.

Read also | Reasons for bitcoin's rise above $100,000

Even better? The SNB holds 466,000 Microstrategy shares. A company known for accumulating bitcoins in its capital. The company holds 450,000 bitcoins, worth $25.6 billion. The SNB is therefore exposed to bitcoin to the tune of $60.5 million through this American company.

So it's not bitcoin that's going to trouble the SNB. This central bank has become a veritable hedge fund which is currently working wonders. However, I doubt that UBS will be able to rescue it when the time comes.

Separating money from politics

This idea of imposing investments on the SNB is likely to have a following. If the SNB has to invest in bitcoin, couldn't it invest in carbon credits? Or renewable energies? Or «reducing inequalities» of all kinds?

There's no need to project ourselves into a redistributive SNB, this is already the case. It has to share its surpluses with the shareholder cantons. Every year since then, each canton has been hoping for more and more magic money from the sky. Even if it means putting their budget in the red when the magic money is less.

Read also | Bitcoin suits Switzerland

Let's try not to aggravate this situation, where everyone is already expecting a lot from the SNB. It is there to arbitrate between a strong franc and a competitive economy. Imposing bitcoin on the SNB risks opening a pandora's box and turning it into a cornucopia of wealth. hedge fund.

Developer with a passion for technology, François Jolain is the animator of the Codable.tv.

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