A future in which Bitcoin (BTC), stablecoins and central bank digital currencies (CBDCs) can coexist in the Swiss city of Lugano is “entirely possible,” according to a local financial official.
Paolo Bortolin, Deputy Director of Finance (CFO) of the City of Lugano, is optimistic about a future in which different digital currencies and assets can be used together. This is because Bitcoin, CBDC and stablecoins can potentially effectively serve different purposes for users, the official said.
“Bitcoin, being Bitcoin, is always present and operates independently, in a completely decentralized manner,” Bortolin told Cointelegraph.
In contrast, CBDCs are centralized by definition and name and serve a completely different purpose. Wholesale CBDCs are used in the financial sector for transactions between institutions, while retail CBDCs are seen as a standard digital currency for everyday payments or peer-to-peer transactions similar to those made with the traditional Swiss franc.
While Bitcoin and CBDC do not directly conflict, certain types of government-issued money could potentially conflict.
“While wholesale CBDCs are expected to emerge quickly, the outlook for retail CBDCs is less clear,” Bortolin noted, referring to issues associated with retail CBDCs such as privacy. In addition, retail CBDCs provide competition to traditional banks, the official said. He ruled:
“If people can manage all their Swiss francs through a digital wallet controlled by a central bank, and can easily manage decentralized financial investments through CBDC, the need for traditional banks could be reduced.”
Bortolin went on to say that stablecoins such as Tether (USDT) are also likely to become an important element of the digital financial ecosystem, at least before retail CBDCs become widespread.
“These privately issued stablecoins could compete for dominance, with one potentially becoming the leader in each currency, much like Tether currently holds the position for the US dollar,” Bortolin said.
Related: BIS Announces CBDC and Tokenization Projects for 2024
Bortolin mentioned that Switzerland has made progress with its Helvetia III wholesale CBDC project. “While we have not been actively involved in this new project—only two bonds have been issued under this system to date—discussions are underway to continue this approach in the coming months,” Bortolin said, adding:
“If the Swiss National Bank issues a CBDC, we will definitely use it, that’s normal.”
In December 2023, Lugano expanded its cryptocurrency payment support by accepting Bitcoin and US dollars as payment for taxes and other public charges. In addition to BTC and USDT, Lugano also accepts payments in LVGA, a local blockchain-based stablecoin specifically designed for payments in the city.
Since launching Lugano's Plan B initiative in collaboration with Tether, Lugano has amassed 400 merchants accepting BTC and USDT and 14,000 users.