Switzerland dismissed a proposal to radically change the way banks lend money, a victory for the financial establishment, including Swiss National Bank President Thomas Jordan.
Vollgeld, as the plan is known in German, was the latest in a string of national ballots over the past few years that critics argued were reckless and would make Switzerland unattractive for businesses.
Jordan became one of its most prominent critics, saying that it amounted to a “dangerous experiment.”
The sovereign money initiative would have ended the centuries-old system of fractional reserve banking by allowing only the central bank to create money and requiring checking accounts to be fully backed by assets that are a direct claim on the monetary authority.
Three-quarters of voters rejected it.
“The Swiss are known to be cautious people, especially in the realm of finance,” said Michael Hermann, a political scientist who heads Zurich-based research institute Sotomo.
As Vollgeld meant entirely uncharted territory, voters rejected it, given that “uncertainty is always poison for stability,” Hermann said.
The Swiss franc was down 0.4 percent to 1.16324 per euro at 9:24am yesterday as demand for haven assets eased and Italian bonds surged. That followed Italian Minister of Finance Giovanni Tria’s signal of commitment to the euro in a weekend interview.
Plebiscites and referendums are a feature of Switzerland’s political system, with votes on a variety of topics taking place several times a year.
Examples include a 2014 immigration vote that threatened to cancel a set of economically vital treaties with the EU, a proposal for universal basic income, a requirement that the central bank hold 20 percent of its asset in gold and a plan to tie the pay of corporate executives to their least-paid underlings. The latter three failed.
“There were various company headquarters of firms in America or England that asked their Swiss subsidiaries: ‘What exactly are they doing in Switzerland? How is this going to continue?’ Because this isn’t the first initiative,” said Ruedi Noser, a member of parliament for the Swiss Free Democratic Party.
“Switzerland would’ve been the only country in the entire world that would’ve gone for this experiment and global business doesn’t want a location where one is experimenting,” Noser said.
While polls had suggested that a rejection was likely, supporters mustering the 100,000 signatures necessary to put it on the ballot is testament to the distaste about the financial industry still palpable a decade after the financial crisis.
Although the crises was sparked by the collapse in 2007 of Lehman Brothers, Switzerland did not escape and was in 2008 forced to bail out UBS Group AG, its biggest bank.
Proponents of Vollgeld have said that by putting the central bank solely in charge of steering the amount of money in the economy, there would be more safeguards to prevent the kind of asset price bubbles that caused the 2008 financial crisis.
The movement, whose genesis can be traced back to the Chicago Plan of reforms after the Great Depression, has gained the most prominence in Switzerland, thanks to its direct democracy, but it has also found favor in other countries.
The UK’s Positive Money group said that the failed plebiscite constituted “the beginning of a global conversation about whether control of money creation should be in private or public hands.”
DAMAGE REPORT: Global central banks are assessing war-driven inflation risks as the law of unintended consequences careens around the world, spiking oil prices Central banks from Washington to London and from Jakarta to Taipei are about to make their first assessments of economic damage after more than two weeks of conflict between the US and Iran. Decisions this week encompassing every member of the G7 and eight of the world’s 10 most-traded currency jurisdictions are likely to confirm to investors that the specter of a new inflation shock is already worrying enough to prompt heightened caution. The US Federal Reserve is widely expected to do exactly what everyone anticipated weeks ahead of its March 17-18 policy gathering: hold rates steady. The narrative surrounding that
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) share of the global foundry market rose to almost 70 percent last year amid booming demand for artificial intelligence (AI), market information advisory firm TrendForce Corp (集邦科技) said on Thursday. The contract chipmaker posted US$122.54 billion in revenue, up 36.1 percent from a year earlier, accounting for 69.9 percent of the global market, TrendForce said. Its share was up from 64.4 percent in 2024, it said. TSMC’s closest rival, Samsung Electronics, was a distant second, posting US$12.63 billion in sales, down 3.9 percent from a year earlier, for a 7.2 percent share of the global market. In the
At a massive shipyard in North Vancouver, Canadian workers grind metal beams for a powerful new icebreaker crucial to cementing the country’s presence in the increasingly contested arctic. Icebreakers are specialized, expensive vessels able to navigate in the frozen far north. And “this is the crown jewel,” said Eddie Schehr, vice president of production at the Seaspan shipyard. For Canadian Prime Minister Mark Carney, who heads to Norway next Friday to observe arctic defense drills involving troops from 14 NATO states, Canada’s extreme north has emerged as a strategic priority. “Canada is and forever will be an Arctic nation,” he said ahead of
Chinese entrepreneur Frank Gao used to spend long hours running his social media accounts but now outsources the chore to artificial intelligence (AI) agent tool OpenClaw, which is taking China by storm despite official warnings over cybersecurity. OpenClaw, created in November by an Austrian coder, differs from bots such as ChatGPT because it can execute real-life tasks such as sending e-mails, organizing files or even booking flight tickets. “Since January, I’ve spent hours on the lobster every day,” Gao said in an interview, referring to OpenClaw’s red crustacean mascot. “We’re family.” After downloading OpenClaw, users connect it to artificial intelligence models of their
RSS