A future where Bitcoin, stablecoins and central bank digital currencies can coexist in the Swiss city of Lugano is “quite possible,” according to a local official.
Paolo Bortolin, deputy chief financial officer for the city of Lugano, is optimistic about a future where different digital currencies and assets could be used all together. That is because Bitcoin, central bank digital currencies (CBDC) and stablecoins could potentially effectively serve different purposes for users, the official believes.
“Bitcoin, being Bitcoin, is a constant presence and operates independently in a fully decentralized manner,” Bortolin said in an interview with Cointelegraph.
In contrast, CBDCs are centralized by definition and name. Wholesale CBDCs are used within the financial sector for transactions among institutions, while retail CBDCs are seen as the standard digital currency for everyday payments or peer-to-peer transactions, similar to those made with the traditional Swiss franc.
While Bitcoin and CBDCs do not have a direct conflict, some types of state-issued money could potentially conflict.
“While wholesale CBDCs are anticipated to arrive swiftly, the outlook for retail CBDCs is less certain,” Bortolin noted, referring to retail CBDC-associated concerns like privacy. Additionally, retail CBDCs pose competition to traditional banks, according to the official. He stated:
“If individuals can manage all their Swiss francs through a digital wallet controlled by the central bank, and may manage decentralized finance investments easily via a CBDC, the necessity for traditional banks might diminish.”
Bortolin said that stablecoins like Tether are also likely to be an important element of the digital financial ecosystem, at least before retail CBDCs are widely adopted.
“These stablecoins, issued by private entities, could compete for dominance, with one potentially emerging as the leader in each currency, much like Tether currently holds the position for the United States dollar,” Bortolin said.
Bortolin mentioned that Switzerland has progressed with its wholesale CBDC project Helvetia III. “While we haven't actively participated in this new project — only two bonds have been issued under this system so far — discussions are underway to proceed with this approach in the coming months,” Bortolin said, adding:
“If the Swiss National Bank issues a CBDC, we will certainly use it; that is normal.”
In December 2023, Lugano extended the scope of supported crypto payments and started accepting Bitcoin and USDT as payment for taxes and other community fees. In addition to BTC and USDT, Lugano also accepts payments in LVGA, the local blockchain-based stablecoin specifically designed for payments in the city.
Since launching Lugano’s Plan B initiative in cooperation with Tether, Lugano has amassed 400 BTC and USDT-accepting merchants and 14,000 users.