In the picturesque Swiss city of Lugano, a harmonious coexistence of various digital currencies seems increasingly plausible, as local official Paolo Bortolin, the deputy chief financial officer for the city, envisions a future where Bitcoin, central bank digital currencies (CBDCs), and stablecoins can seamlessly operate in tandem.
Bortolin’s optimism stems from the belief that each of these digital assets serves distinct purposes within the evolving financial landscape.
Bitcoin, celebrated for its decentralized nature, stands as a steadfast presence that operates independently. In Bortolin’s view, this flagship cryptocurrency plays a unique role in the digital currency spectrum.
In stark contrast, CBDCs inherently embody centralization both in name and function.
Wholesale CBDCs primarily facilitate transactions among financial institutions, while retail CBDCs aspire to be the standard digital currency for everyday transactions, mirroring the Swiss franc’s traditional usage.
Though Bitcoin and CBDCs appear to coexist without direct conflict, potential friction arises when considering certain state-issued currencies.
Retail CBDCs, intended for widespread use, face uncertain prospects, largely due to concerns about privacy and their competitive impact on traditional banks.
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Stablecoins, exemplified by Tether, also play a pivotal role in Lugano’s digital financial landscape, especially before the widespread adoption of retail CBDCs.
Bortolin posits that if individuals can seamlessly manage their Swiss francs through a central bank-controlled digital wallet and navigate decentralized finance investments via CBDCs, the necessity for conventional banking institutions could dwindle.
Bortolin anticipates stablecoins issued by private entities could vie for dominance, with a leading stablecoin emerging for each currency, similar to Tether’s current dominance with the U.S. dollar.
Switzerland is not oblivious to these developments.
The wholesale CBDC project Helvetia III has been progressing, with Bortolin acknowledging ongoing discussions regarding its implementation. If the Swiss National Bank issues a CBDC, Lugano is prepared to embrace it as part of its financial ecosystem.
In a significant move towards cryptocurrency acceptance, in December 2023, Lugano expanded its support for digital payments, including Bitcoin and USDT, for taxes and community fees.
Additionally, the city welcomes payments in LVGA, a local blockchain-based stablecoin designed for use within Lugano.
Building on the success of the “Plan B” initiative in collaboration with Tether, Lugano has attracted 400 merchants accepting BTC and USDT, along with a user base of 14,000 individuals.
These developments signal Lugano’s commitment to embracing the multifaceted future of digital currencies and establishing itself as a hub for innovation in the evolving financial landscape.
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