SNB's Tschudin warns stablecoins could weaken monetary policy transmission

Swiss National Bank (SNB) governing board member Petra Tschudin said on Wednesday that the bank is cautious about stablecoins because they could make monetary policy transmission more difficult. Tschudin said the SNB welcomes innovation but must consider its consequences and regulation. She warned that large stablecoins operating far from the existing two-tier financial system would increase the burden on central banks in fulfilling their mandates. Stablecoins are cryptocurrencies designed to maintain a steady value by being pegged to assets such as the dollar or gold. Tschudin said the SNB is concerned about the possible impact on central bank money, the risk-free cash used to settle transactions between commercial banks. She said a stablecoin denominated in francs would not automatically be worth the same as a franc because stablecoins operate outside the central bank system. That difference could undermine the principle that money should have a uniform value everywhere, she said. Tschudin warned that households and businesses moving money from commercial banks into stablecoins could reduce the amount banks can lend and affect interest rates. She said that shift could weaken a central bank's ability to steer borrowing costs through changes to its policy rate.