Certain central banks – those of Singapore and Hong Kong, for example – are now focusing on this, as are private initiatives. Should the anticipated advantages materialise, the attendant efficiency gains would be substantial. That said, for both of these potential applications there are high barriers that have to be overcome in order for new solutions to be implemented in practice and find their place in the market. The current ecosystem comprises a large number of stakeholders, who would have to adapt their systems and processes. The high level of investment this entails is curbing the pace of developments, as are the technical and legal questions still to be resolved. Tried-and-tested division of roles between banks and central banks What is the SNB’s take on these developments? We welcome innovations that enhance the efficiency of processes. But while the initial experiments have been promising, there is still a long way to go before market-ready DLT solutions become a reality in the FMI. DLT has still to prove that the hoped-for efficiency gains can actually be delivered in practice. Furthermore, simply enhancing efficiency alone is not enough. Such gains must not come at the expense of the availability and resilience of the systems or the integrity of the data. This applies especially to those parts of the FMI that are systemically important. Here we set the highest of standards when it comes to stability and security. Page 4/8  The secure settlement of large-value payments is a prerequisite for the stability of the financial system.
They are more of a speculative investment instrument than a means of payment capable of retaining its value. The chart on the right-hand side of the slide illustrates this. Compared with exchange rates, commodities and equities, cryptocurrencies are subject to very high volatility, and investors must be aware of the financial risks they are taking on when buying them. Cryptocurrencies therefore do not meet the requirements of a currency. However, this does not mean we can simply dismiss them out of hand, for behind all of the hype there is an array of technological innovations. Particularly important among these is the distributed ledger technology, known as DLT for short and often also referred to as blockchain. In other words: it is important to make a clear distinction between cryptocurrencies as assets, and the underlying technology, which does indeed have potential. DLT could facilitate solutions in various areas of the economy that would enhance the safety  Page 2/8  and efficiency of digital information flows. A distributed ledger is essentially a decentralised and synchronised database that allows participants to read, write and save information. DLT makes it possible to unequivocally define ownership structures within a computer network, without the need for a central third party. These facets also give rise to interesting possibilities for the financial sector, and DLT is therefore regarded as one of the biggest innovations in the fintech area.