Fintech, DLT and cryptocurrencies are currently attracting a great deal of attention among the general public and in the financial industry. Although alternative private currencies are nothing new, in the modern digital era they can be created more or less at the click of a mouse. However, that alone does not make cryptocurrencies comparable with money - far from it.

It is important to draw a distinction between cryptocurrencies as an investment instrument and the underlying technology. The distributed ledger technology, or DLT for short, on which these currencies are based does indeed have potential in various areas of the economy. DLT is regarded as one of the biggest innovations in the fintech area.

DLT could also affect an important part of the financial system, namely the financial market infrastructure. Since facilitating and securing the operation of cashless payment systems is one of the SNB's statutory tasks, and also because it depends on a secure financial market infrastructure, the SNB monitors developments in this area very closely. The SNB welcomes innovations that enhance efficiency, but this must not be taken as the only criterion. As a central bank, the SNB is obliged to keep a close eye on the risks involved, too. This applies especially to those parts of the infrastructure that are systemically important for Switzerland. Here the SNB sets the highest of standards when it comes to security.

To minimise risks in systemically important areas, there still needs to be a risk-free payment instrument. This is why time-critical, large-value payments are now usually settled through central banks' payment systems and in central bank money. Central banks thereby ensure that the infrastructure provides a reliable foundation. It is currently too early to say whether DLT will in future be put to use in this domain, too. Should DLT take hold in securities settlement, the question would then arise as to how DLT-based securities systems and conventional central bank payment systems can coexist.

Which technologies and solutions ultimately prevail on this solid foundation should in principle be left to the market to decide, however. This division of roles between central banks and commercial banks epitomises our current two-tier financial system. It contributes to the stability of the system, while allowing sufficient leeway for innovation.

However, there is more to fintech than just DLT. To satisfy constantly evolving customer demands, fintech companies and banks alike are working on new solutions. One of the key focal points for fintech is retail payments. The SNB will keep a close watch on developments to ensure that it always remains able to assess their potential impact on the financial system in good time.

A more prominent role for central banks in this end-customer business area is currently a subject of debate, amid calls for 'digital central bank money for the general public'. The SNB opposes this idea. Digital central bank money for the general public is not necessary to ensure an efficient system for cashless payments. It would deliver few advantages, but would give rise to incalculable risks with regard to financial stability.