ZURICH, May 17 (Reuters) - Switzerland’s government has requested a report into the risks and opportunities of launching its own cryptocurrency, a so-called “e-franc” that would use technology similar to privately-launched coins like bitcoin but have backing of the state.

The lower house of the Swiss parliament must now decide whether to back the Federal Council’s request for a study into the subject that has already been discussed in Sweden.

Cryptocurrencies have drawn scrutiny from lawmakers and international governing bodies coming to grips with the technology’s rapid ascent. The coins use encryption and a blockchain transaction database designed to enable anonymous transactions which do not require centralized processing.

Several countries have begun evaluating the viability of introducing their own state-backed digital currency, with Sweden’s Riksbank saying an e-crown might help counteract issues arising from declining cash use and help make payment systems more robust.

But existing digital currencies such as bitcoin have been hampered by extreme volatility, high-profile hacks and doubts about long-term viability. Venezuela has issued a state-backed coin, but major developed economies have so far steered clear.

The Bank of International Settlement in March warned central banks to think hard about potential risks and spillovers before issuing their own cryptocurrencies.

In Switzerland, if the proposal is approved, a study will be produced by the Swiss finance ministry. No timing has been given on when it would be published should the go-ahead be given.

Swiss lawmaker Cedric Wermuth, vice president of the Social Democratic Party, called for the study. In its response on Thursday, the Swiss government, or Federal Council, backed the proposal to look into it, although it said there were hurdles.

“The Federal Council is aware of the major challenges, both legal and monetary, which would be accompanied by the use of an e-franc,” it said. “It asks that the proposal be adopted to examine the risks and opportunities of an e-franc and to clarify the legal, economic and financial aspects of the e-franc.”

The Swiss National Bank has so far been cautious on the issue. Private-sector digital currencies were better and less risky than any version that might be offered by a central bank, SNB governor Andrea Maechler said last month. (Reporting by John Revill and Angelika Gruber Additional reporting by Brenna Hughes Neghaiwi Editing by Peter Graff)