Thomas Moser, an alternate member of the Swiss National Bank's governing board, told Business Insider that central banks around the world have become "sceptical" of introducing national digital currencies after initial interest.
"In the beginning, there was a lot of interest and enthusiasm about issuing their own national cryptocurrency but I think, in the meantime, that enthusiasm has slowed again because of the implications it would have for financial stability," Moser told Business Insider.
Earlier this month the South African Reserve Bank announced its test of distributed ledger technology involving seven banks – using the blockchain technology that underpins currencies like bitcoin – had been a success. But it warned that had only proven the concept, and said more work would be required to take it further.
"The whole technical issue, which excited everyone, really takes second place to this conceptual policy issue," said Moser. "The mood now is: everyone is monitoring it, some are experimenting with it, heavily, but I think everyone is waiting for someone else to do it first so we can."
Still, Moser said he would not be surprised if national cryptocurrencies emerged in the longer term.
"It to some extent makes sense to have an electronic version of the banknote but the implications are quite big," Moser told Business Insider at the Crypto Valley Conference this week.
"The advantages are relatively small but the unknown risks are potentially large so I think the balance is to be cautious."
The likes of the Bank of England and the Bank of Canada have been experimenting behind closed doors with how they might use cryptocurrencies and blockchain technology. Sweden is also touted as a possible early adopter, with talk of an e-krona, and Japan is pursuing the "J-coin."
Moser said that after an initial wave of enthusiasm, banks had become "sceptical" of cryptocurrencies due to the economic implications of having digital central bank money. He gave the example of how digital money could potentially exacerbate bank runs.
"It’s kind of cumbersome to have all your money, all your savings in bank notes. It’s much easier if you can just switch it or have an account with the Swiss national bank," he said. "Then it becomes very volatile — in good times everyone has their money with the banks to earn interest, in the bad times, everyone has it on their devices. There are the things we need to think about how we would handle.
"You basically compete with bank accounts when you issue digital central bank money. You have to think through how you would do monetary policy, how the transmission channel is changing, it’s just very complicated."
Bitcoin was originally created by programmers who wanted to do away with central banks but Moser said the Swiss National Bank was not against the idea of digital currencies despite this.
"The Swiss national bank officially is basically neutral towards cryptocurrencies," Moser said. "We are not worried, we don’t mind."
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