Digital Shift in Swiss Economy Shows Substantial Opportunity for Swiss Stablecoin, Bitcoin Suisse Says

Switzerland’s transition from a cash-centric society to embracing digital payments is paving the way for Swiss stablecoins to play a significant role in the future of finance.

• 35% of in-store purchases now made with debit cards, surpassing cash.
• Bitcoin Suisse sees potential for Swiss stablecoins amid digital payment surge.
• SNB cautious about CBDCs due to privacy concerns.

The Swiss National Bank (SNB) survey reveals a notable shift in payment preferences, with debit cards now accounting for 35% of in-store purchases in 2024, compared to 30% for cash. This marks a significant change from 2017, when cash dominated with 70% of transactions and cards were used in just 21%. Despite Switzerland’s high average cash holdings per person—around $10,481—the trend towards digital payments is undeniable.

Mobile payment apps are also on the rise, making up 18% of payments, while credit cards account for 14%. The SNB has noted that public transport operators are planning to reduce cash acceptance, further pushing the digital agenda. However, the SNB remains cautious about introducing a Central Bank Digital Currency (CBDC), prioritizing privacy and data protection over the potential benefits of digital money. A CBDC is a digital currency issued by a central bank, while stablecoins are cryptocurrencies designed to minimize volatility by being pegged to a stable asset like the Swiss Franc.

Bitcoin Suisse AG sees a golden opportunity in this evolving landscape. Dominic Weibel, head of research at Bitcoin Suisse AG, highlights the potential for stablecoins to play a major role, especially as mobile payment apps like TWINT gain popularity. He notes:

While crypto payments remain niche today, the transition to digital means of payments creates fertile soil for utility, especially given that 8% of the global population now own crypto. Worldline already supports crypto at +85,000 merchants, and cities like Lugano for instance are accepting Bitcoin or stablecoins for everyday transactions.

Weibel further elaborates on the potential for Swiss stablecoins, stating:

We expect adoption to develop from a novel concept into broader optionality in the retail domain, although at a relatively slower pace than in other countries where weakening local currencies catalyse demand for tokenized dollars.

He also points out the dominance of dollar-denominated stablecoins, which currently hold a 99% market penetration, but sees a “substantial opportunity for a Swiss stablecoin” given the increasing adoption of mobile payment apps.

However, the SNB’s caution is rooted in deep concerns about privacy and data protection. Thomas Moser, a senior economist at the SNB, explains:

If, on the other hand, you pay digitally, a lot of data is generated. Not only financial data but also data about what you buy and where you are at any given time.

This highlights the tension between the convenience of digital payments and the potential loss of privacy. In a country known for its financial stability and privacy concerns, this balance is crucial.

Despite these concerns, Swiss institutions are not shying away from blockchain technology. UBS has issued digital bonds, and the SNB is running a wholesale CBDC pilot, indicating a growing institutional engagement with blockchain infrastructure. These developments suggest that Switzerland is well-positioned to leverage blockchain technology for financial innovation.

As Switzerland continues its digital journey, the potential for Swiss stablecoins to fill a niche in the payment landscape is clear. Yet, the balance between embracing digital innovation and protecting privacy remains a critical challenge. The country’s favorable regulatory environment and its “Crypto Valley” in Zug further support the adoption of digital currencies, making the future of Swiss stablecoins an exciting prospect to watch.

Key Questions and Takeaways

• What percentage of in-store purchases in Switzerland were made with debit cards in 2024?

  35% of in-store purchases were made with debit cards in 2024.

• How does the current use of cash in Switzerland compare to 2017?

  In 2024, cash accounted for 30% of in-store purchases, a significant decrease from 70% in 2017.

• What is the average cash holding per person in Switzerland?

  The average cash holding per person in Switzerland is around $10,481.

• What role do mobile payment apps play in Switzerland’s payment landscape?

  Mobile payment apps account for 18% of payments in Switzerland, indicating a growing trend towards digital payments.

• What opportunities does Bitcoin Suisse AG see for Swiss stablecoins?

  Bitcoin Suisse AG sees substantial opportunities for Swiss stablecoins, particularly as they can remove the volatility associated with other cryptocurrencies and integrate with mobile payment apps.

• Why is the SNB cautious about introducing a CBDC?

  The SNB is cautious due to privacy and data protection concerns, as digital payments generate significant amounts of data that could compromise user anonymity.

• What recent developments in Swiss banks indicate institutional engagement with blockchain infrastructure?

  UBS’s issuance of digital bonds and the SNB’s wholesale CBDC pilot demonstrate institutional engagement with blockchain infrastructure.