The Swiss Bankers Association (SBA) resolutely rejects the Swiss Sovereign Money Initiative

The Federal Council today recommended that parliament reject the referendum on the Swiss Sovereign Money Initiative without a counterproposal. 

The SBA as well categorically rejects the Swiss Sovereign Money Initiative on the following grounds:

  • The initiative endangers what is a well-functioning system and puts jobs, tax revenues, a secure economic system and Switzerland’s prosperity at risk in a reckless and irresponsible manner. For Switzerland, which is highly interconnected at the international level, to go it alone is therefore an incalculable risk.
  • The money created by the banks at present facilitates a flexible supply of credit to the economy. The banks know their private and corporate customers and only grant sustainable loans. This system enables growth and prosperity, which benefits everyone.
  • Switzerland has already effectively stabilised its financial system (e.g. higher capital requirements, more stringent liquidity requirements). Even a sovereign money system does not override market rules and can therefore also not stave off financial crises.
  • Depositors would be in an even worse position: flexible savings accounts would be replaced by fixed minimum term investments. Private accounts would generate even lower interest rates due to the ban on lending.
  • Providing credit to private individuals and companies would become more expensive and complicated because the credit volume would not be driven by the market, but rather centrally and at the discretion of the Swiss National Bank (SNB). This would put growth and stability at risk.
  • Compared to the present situation, sovereign money has no counter value. Instead, it depends solely on confidence in the SNB. The SNB would be forced to print new money without at the same time buying recoverable assets such as foreign exchange reserves.
  • The work of the National Bank would become highly politicised; the balance between the state authorities would thus be undermined: the prospect of receiving a share of the profit from the creation of money would expose the National Bank to extreme political pressure. Because the SNB would then also effectively determine the volume of credit, its economic mandate would have to be expanded significantly.
  • Numerous activities (mortgage lending, flexible accounts) would no longer be profitable for banks, state institutions would therefore have to step into the breach.

For a comprehensive overview of the arguments that illustrate the danger of the Sovereign Money Initiative (in German), click here.