SNB Sees Blockchain Scope for Payments, Securities Settlements

(Bloomberg) -- The technology on which digital currencies such as Bitcoin are based has the scope to reshape securities settlement and cross-border payment systems, according to the Swiss National Bank.

“The underlying distributed ledger technology does indeed have potential, especially in complex areas such as securities settlement and cross border payment transactions,” SNB Governing Board Member Andrea Maechler said in a speech in Zurich on Thursday. “Nevertheless, the technology still has to prove itself in practice.”

Nine years after Bitcoin's birth, central banks around the world are recognizing the potential upsides -- and downsides -- of digital currencies. The decentralized ledger technology on which they are based has also caught Wall Street's attention because it could vastly reduce costs while speeding up trade clearing and settlement times.

Read More: What the World's Central Banks Are Saying About Cryptocurrencies

Reiterating the line taken by SNB Vice President Fritz Zurbruegg in February, Maechler also said a central bank-issued digital currency wasn't necessary for the general public. It would have hardly any advantages and would lead to financial stability risks, she said.

--With assistance from Eddie van der Walt

To contact the reporter on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net.

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Zoe Schneeweiss, Jan Dahinten

©2018 Bloomberg L.P.