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.”
FALLING BEHIND: Samsung shares have declined more than 20 percent this year, as the world’s largest chipmaker struggles in key markets and plays catch-up to rival SK Hynix Samsung Electronics Co is laying off workers in Southeast Asia, Australia and New Zealand as part of a plan to reduce its global headcount by thousands of jobs, sources familiar with the situation said. The layoffs could affect about 10 percent of its workforces in those markets, although the numbers for each subsidiary might vary, said one of the sources, who asked not to be named because the matter is private. Job cuts are planned for other overseas subsidiaries and could reach 10 percent in certain markets, the source said. The South Korean company has about 147,000 in staff overseas, more than half
Taipei is today suspending its US$2.5 trillion stock market as Super Typhoon Krathon approaches Taiwan with strong winds and heavy rain. The nation is not conducting securities, currency or fixed-income trading, statements from its stock and currency exchanges said. Yesterday, schools and offices were closed in several cities and counties in southern and eastern Taiwan, including in the key industrial port city of Kaohsiung. Taiwan, which started canceling flights, ship sailings and some train services earlier this week, has wind and rain advisories in place for much of the island. It regularly experiences typhoons, and in July shut offices and schools as
TECH PARTNERSHIP: The deal with Arizona-based Amkor would provide TSMC with advanced packing and test capacities, a requirement to serve US customers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is collaborating with Amkor Technology Inc to provide local advanced packaging and test capacities in Arizona to address customer requirements for geographical flexibility in chip manufacturing. As part of the agreement, TSMC, the world’s biggest contract chipmaker, would contract turnkey advanced packaging and test services from Amkor at their planned facility in Peoria, Arizona, a joint statement released yesterday said. TSMC would leverage these services to support its customers, particularly those using TSMC’s advanced wafer fabrication facilities in Phoenix, Arizona, it said. The companies would jointly define the specific packaging technologies, such as TSMC’s Integrated
An Indian factory producing iPhone components resumed work yesterday after a fire that halted production — the third blaze to disrupt Apple Inc’s local supply chain since the start of last year. Local industrial behemoth Tata Group’s plant in Tamil Nadu, which was shut down by the unexplained fire on Saturday, is a key linchpin of Apple’s nascent supply chain in the country. A spokesperson for subsidiary Tata Electronics Pvt yesterday said that the company would restart work in “many areas of the facility today.” “We’ve been working diligently since Saturday to support our team and to identify the cause of the fire,”
RSS