Switzerland’s central bank governor, Martin Schlegel, dismissed the idea of bitcoin as a reserve currency, citing its extreme volatility and lack of liquidity.

His remarks come as Switzerland faces a potential referendum on the issue.

"Cryptocurrencies do not meet the standards that a good currency should have," Schlegel said in an interview published Saturday by the Tamedia media group. He emphasized that reserves "must be very liquid so that they can be used quickly," adding that bitcoin’s instability makes it unsuitable for such a role.

Schlegel, who has led the Swiss National Bank (SNB) since October 2024, described cryptocurrencies as "a niche phenomenon mostly used for speculation" and raised concerns over their security, stating that "they are basically just software."

A popular initiative was launched in December 2024 to mandate that the SNB include bitcoin in its monetary reserves. Under Switzerland’s direct democracy system, organizers have until June 2026 to collect 100,000 signatures to trigger a referendum.

Meanwhile, bitcoin has seen sharp declines, dropping below $80,000 on Friday for the first time since November. The cryptocurrency has now lost over 25% of its value since peaking at nearly $110,000 just hours before President Donald Trump's inauguration on January 20.