Gold To Return As A Pure Gold Standard In Switzerland?

By Mark Rogers

Some interesting news from Switzerland: the Swiss People’s Party’s campaign to compel the holding of a referendum on the sale of the nation’s gold by the Swiss National Bank has successfully gathered the required 100,000 signatures; last Thursday, May 16, 2013, the Federal Chancellery announced that the referendum would be held. The Financial Times, however, points out that “it is not uncommon for the period between an initiative being accepted for referendum and a vote being held to extend to several years.” No doubt the Swiss National Bank welcomes such a delay.

At present the SNB holdings of gold form 10% of its reserves, and not all of it is in the bank’s own vaults; the bulk at 70% is in Switzerland; 20% is at the Bank of England, with the rest stored at the Bank of Canada..

The Swiss People’s Party wants that externally held 30% to be returned to Switzerland, and wants the bank to increase its holdings to 20%. Until the constitution was revised in 2000, the SNB had been obliged to keep 40% of its reserves in gold.

But the interesting thing about this initiative is that it is part of a much larger campaign by the Swiss People’s Party to return to a pure gold standard by reintroducing the Swiss gold franc as money. Confidence in the Swiss franc and monetary policy has been shaken by the attempts of the SNB to devalue the franc which have resulted in big losses; this combined with the sell-offs at low prices (shades of Gordon Brown’s tampering with the U.K.’s gold) 2001-2006 have accumulated losses of billions of Swiss francs.

Given that Switzerland was the last country to stop backing its currency with gold, only coming off its domestic gold standard in 2000 under the revised constitution, it is noteworthy that the dumping of gold and the devaluing of the franc followed promptly in 2001.

The latest initiatives, for a referendum and for a gold franc, have not unnaturally caused consternation at the SNB; it is concerned at “the monetary policy implications of the demands in the initiative.”

Well, indeed.

For further stories on this issue, see “Swiss Parliament to discuss gold franc”; “Swiss Intiative reveals push for gold-backed currency”; and “Swiss To Vote On Gold Repatriation – “Gold Is The Only Valuable Asset On The SNB’s Balance Sheet”

For the raison d’être of these articles on goldcoin.org read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

For background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

For a series of articles on the pernicious effects of progressive tax regimes: THE MORAL DILEMMA AT THE HEART OF TAXATION

For a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES

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GOLD TO RETURN AS A PURE GOLD STANDARD IN SWITZERLAND? was first posted on May 23, 2013 at 6:26 pm.
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