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Swiss Referendum Likely to Guard Against Digital Currency

In what is fast becoming a likely scenario, Swiss citizens may soon face a referendum to preserve cash status.

Photo by Markus Spiske / Unsplash / Blockhead

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Following a pre-emptive campaign to protect against digital currency, Swiss residents will likely decide in a future referendum whether to include the availability of cash in the constitution.

The Swiss Freedom Movement, the ballot's campaigners, claimed to have gathered 157,422 signatures in favour of such a vote.

A referendum must be called under the laws of Swiss direct democracy if officials confirm that the total did, in fact, reach 100,000 or over.

Swiss holds the most cash per capita compared to other major countries in dollar-equivalent terms.

The average resident of the country has the most cash on hand, about $11,824 per person, of any country where data is collected by the Bank for International Settlements.

While government officials or the central bank have not declared a desire to do away with currency any time soon, the latest initiative demonstrates how sensitive real money is in Switzerland.

If the referendum goes forward, it will be a rare occasion where people's attitudes towards physical cash are tested at the polls rather than just by their spending patterns.

That might interest central bankers from the eurozone considering whether to push a plan for digital currency.

Why the Movement?

In a media interview, the president of the Swiss Freedom Movement, Richard Koller, said, "We need to change the constitution so that we can retain cash as freedom for the next generation."

He also said that authorities, including those in Switzerland, are inclined to support a "tendency toward digital currencies."

Although most transactions in Switzerland still involve cash, this practice is dwindling.

According to a Swiss Payment Monitor report, at the end of 2018, only 29% of transactions were completed with actual currency, down from 48% in 2019.

The largest banknote, worth 1,000 Swiss francs, holds most of the country's cash, about US$55.3 billion.

This implies that actual money is not utilised for payments but rather as a store of value.

In contrast, figures from 2021 show that the 50-euro bill is the most widely used currency in the eurozone.

According to the Riksbank, just 8% of consumers made their most recent purchase in cash in the neighbouring digitally advanced Sweden.

Will the Swiss Get Left Behind?

Swiss officials, though, have repeatedly rejected a "digital franc" for making regular payments, even though the Swiss National Bank (SNB) is looking into a digital currency for usage between financial institutions.

They have warned about the dangers of the global transition to cashless transactions, especially using the latest technology for digital currencies.

SNB vice president Martin Schlegel has stated that one of the central bank's primary responsibilities is to supply and distribute actual currency.

But the global race to central bank digital currency and move away from physical cash has prompted the Swiss Freedom Movement group to pre-empt any government intentions to mirror the world's trend.

If the group's over 100,000 signatures are confirmed and ratified by officials, a referendum must be called under the laws of Swiss direct democracy.

Only time will tell if the Swiss are left behind in the global race to new technology like blockchain and digital currencies.

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