Switzerland is known in the cryptocurrency world as the crypto-nation. The government has taken several measures in order to promote the industry in the country, and it had very good effects.
According to a report presented by Moody’s, Switzerland may be in a very vulnerable position due to its strong banking system. Blockchain could disrupt how Switzerland businesses behave and generate a crisis in the banking industry.
Is Switzerland in Danger?
According to a report released by Moody’s Investors Service, cryptocurrencies and blockchain technology could severely hurt Swiss banks.
The report released on Monday reads as follows:
“While making cross-border transactions faster and less expensive would be credit positive for banks, these efficiencies could also compress their fees and commissions, a credit negative.”
Indeed, Switzerland is the country with the highest shares of fee and commission income in revenues. That could be damaged by the development of blockchain technology, that reduces transaction costs almost to zero.
Switzerland has been attracting several crypto related businesses to its country. There are some regulations that are more flexible than in other countries. Zug is the region that has been dubbed ‘crypto-valley’ due to the number of crypto-related companies installed there.
Banking System Threatened
But this situation with the banking system with cryptocurrencies and blockchain technology is not new. Bank of America and JP Morgan have commented about this situation. They explained that if they are not able to adapt to these new technologies their business is at risk.
Bank of America, for example, admitted to the United States regulators that if they do not invest properly, they may be unable to compete with blockchain and cryptos.
The statement released by Bank of America reads:
“Our inability to adapt our products and services to evolving industry standards and consumer preferences could harm our business. The competitive landscape may be impacted by the growth of non-depository institutions that offer products that were traditionally banking products as well as new innovative products.”
JP Morgan has also explained that financial institutions and banks are facing an increased threat from non-banking competitors.
“The widespread adoption of new technologies, including internet services, cryptocurrencies and payment systems, could require substantial expenditures to modify or adapt our existing products and services,” says JP Morgan.
Switzerland may also be affected by these technologies unless the country is intelligent enough to re-invent itself and capture a niche with a promising future ahead.