A Swiss crypto think tank, 2B4CH, has announced plans to gather 100,000 signatures for a referendum on the Swiss central bank holding bitcoin in their reserves.
“The Swiss National Bank is already mandated to hold gold as a monetary reserve asset and the initiative could simply be to add the words ‘and Bitcoin (BTC)’ after ‘gold,’” says Yves Bennaïm, founder of 2B4CH.
Article 99 of the Swiss constitution states that “the Swiss National Bank shall create sufficient currency reserves from its revenues; part of these reserves shall be held in gold.”
The referendum, if it gets the signatures, will change that to ‘part of these reserves shall be held in gold and bitcoin.’
Many cryptonians seem optimistic they will get these signatures, but the organizers themselves don’t have much hope of winning the referendum.
“We do expect most people will vote ‘no’ to something they don’t understand, BUT the goal is to open the conversation and help them learn and understand,” Bennaïm says with the emphasis his.
That might be underestimating the Swiss people however because if it reaches the referendum stage, there will be a debate and current central bank board members will most likely comment on it.
In a far more radical referendum in 2018 where the Swiss people were asked to vote on sovereign money whereby banks don’t print out of nothing when they loan but move deposits around, 40% in Geneva voted in favor as well as 80,000 in Zurich.
That proposal lost overall because it was far too radical in fundamentally and suddenly changing a very complex financial system.
The bitcoin proposal in contrast is a very small technical change deep in the pipelines of the financial system in a way that to most ordinary people, or to the financial system itself, makes no ‘real’ difference.
Yet, would it be better? We are not aware of any central bank holding bitcoin reserves, in part perhaps because they’d have no incentive to tell us and there may be counter incentives to revealing it, at least before piling up first.
The only reason against would be its volatility. Something like Bloomberg might also say why should the central bank hold bitcoin and not Tesla stocks.
The answer to the latter is easier. Bitcoin is not a stock controlled by one man/woman or a board and manipulatable in supply as they please or under the regulatory jurisdiction of potentially a corruptible official and/or an enemy country official.
Bitcoin is neutral, global, uncontrollable by any person or group – at least not without a popular ‘vote’ – under no jurisdiction, and thus enemy governments can transact in it, and bitcoin is a bearer asset unlike stock representations.
Bitcoin is volatile however, but so is gold, and bitcoin’s volatility has been in one direction so far. That may change, but also the attribution of historic value to gold might also change.
Gold will probably always have a place, but this 2000 year old bubble as someone called it might transmutate into a 2000 year old bitcoin bubble, with gold’s value deflating in the process.
Or it might not. We can’t see the future, but what person under 40 that is well educated would choose to hoard gold over a MetaMask wallet? He/she might have some gold jewelry, or even perhaps a bit for diversification, but bitcoin is just not only more intuitive, but also far more accessible and far more concrete in that you can hold bitcoin itself rather than digital paper representations of gold vaults somewhere.
And so there wouldn’t be much of a reason for anyone to really have a strong opinion against this proposal, unless you’re Jamie Dimon shivering in fear of being disrupted.
Where the central bank itself is concerned, some are perhaps even doing this diversification themselves because they’re in the business of minimizing risk and there is a risk, albeit small, that the perception of gold’s value changes over the next ten years because of bitcoin, a risk that can be hedged with the crypto.
So if it reaches the referendum stage, it would be interesting to hear what the central bank’s board members say.
Obviously we may get the dumb rarara nonsense that says nothing as comments, the ‘jihadi’ type as Citadel’s CEO, but it would be a debate and in a debate you’re meant to persuade, so the public would want to hear proper concrete arguments as to why their central bank should not hedge and diversify especially as the upside gains may be considerable, while the losses would be limited to whatever they put in at extremes because bitcoin is not going to zero.
That would raise the question how much should the central bank put in, what percentage. The constitution does not specify it for gold, so the base would be to leave it to the central bank to decide as long as it is some rather than none.
In which case you’d think there would be no reason to be against the proposal because the central bank can satisfy it by holding one bitcoin. Why shouldn’t they have the option?
Symbolically, that would also be an endorsement of sorts of innovation, but practically as well why should the central bank be moving piles of gold – with all the costs that entails – when they can just bitcoin.