Press release for 29 April 2016
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The Swiss Federal Council ignores the evidence and recommends rejection of the Swiss Sovereign Money Initiative 

Berne - The Swiss Federal Council has rejected the Swiss Sovereign Money Initiative despite evidence showing it would result in a more stable finance system and a strengthening of the real economy. This rejection is only advisory; a binding national referendum will be held after it has been discussed in parliament.

Berne – The Federal Council has adopted dispatch on the "Vollgeld" or Swiss Sovereign Money Initiative (9/11/2016): in the announcement it describes why it is rejecting the initiative.

The positive effect of a sovereign money reform has been confirmed by studies from the IMF and KPMG. After a sovereign money reform, the Swiss National Bank would pay out an additional five to ten million Swiss Francs seigniourage profit to the federal government, the cantons or the citizens, which would strengthen the real economy.

Rejection by the Federal Council unfounded
Unfortunately the Federal Council overlooks many of the positive aspects of the Sovereign Money Initiative. Moreover, the five key arguments the Federal Council uses against a sovereign money reform are easy to refute:

1. The Federal Council fears that a sovereign money reform would be "an extensive and untried transformation of its monetary  system and financial sector".
The statement of the Federal Council is inconsistent with the current state of scientific evidence regarding sovereign money: the internationally renowned audit and consulting firm KPMG has recently carried out a meta-analysis showing that the vast number of academic studies on sovereign money predict positive results: sovereign money leads to more economic stability and employment and  lower public and private debt, and it prevents inflation. The Federal Council makes no mention of this. The IMF had also made the advantages clear in an earlier study "The Chicago Plan Revisited".

2. The Federal Council also overlooks the fact that there has always been sovereign money everywhere, and that a sovereign money reform isn't a fundamentally new concept.
Sovereign money in the form of bank-notes, coins and electronic money from a central bank is what people understand by "money"; however, whereas bank-notes and coins are sovereign money, electronic money is only a promise to pay by a bank. Swiss people voted for sovereign money for coins and bank-notes in a national referendum in 1891 (before this, private banks were allowed to print their own bank-notes). The massive rise in the amount of electronic book money that we have in our bank accounts (i.e. non-sovereign money) has happened only in recent decades. This huge change has happened almost imperceptibly. In a survey, 80% of Swiss citizens thought that electronic money was created by the Swiss National Bank and not by banks - this is not the case. The Swiss Sovereign Money Initiative aims to correct this unforeseen negative development by transforming "demand accounts" (normal current accounts) at banks into holdings of genuine sovereign money.

3. The Federal Council fears that by giving the Swiss National Bank the ability to create electronic sovereign money, it would become more exposed to "political covetousness".
The Swiss National Bank  has always been and today is still under great political pressure, which it has to deal with it. In recent years, it proved its independence especially against the desires of the cantons in connection with profit distributions and reduction in the strength of the Swiss Franc.  It must continue to act to fulfil the mandate given to it by the Federal government under the Swiss Constitution, as it has been doing.

4. The Federal Council fears that banks would become less profitable
Banks with or without money-creating powers (i.e. a banking licence) can make profits. This is proved by PostFinance (a post-office based banking service provider in Switzerland) which works without a banking licence so it can't create money by giving loans (as banks can) - it must already have the money to lend. This is how all banks would operate after a sovereign money reform. PostFinance makes approximately CHF 600 million profit annually. Other financial service providers such as insurance companies and portfolio management firms are also profitable without being able to create money themselves. 
     The current privilege of banks to create their own money in effect gives them an enormous state subsidy. Banks today have an unjustified competitive advantage over all other firms. Such distortion of competition does not fit comfortably in a market economy. 

5. The Federal Council fears that it would be difficult to reduce the money supply
In the same way as currently is the case, under a sovereign money system the Swiss National Bank can reduce the money supply by not renewing loans or by selling securities. The Swiss National Bank would never bring the entire money supply into circulation as debt-free sovereign money; the Sovereign Money Initiative allows for it to lend money into circulation. As well as being able to fine tune the amount of money in circulation in this way, the Swiss National Bank can ensure that credit is always available in the economy.   The Swiss Sovereign Money Initiative gives the Swiss National Bank an extra powerful tool with which it can carry out its mandate.

For more information 
Please do not hesitate to contact:
     Emma Dawnay
     Tel: +44 7958458386

Technical Studies on Sovereign Money
The Cobden Centre in London has interviewed us about the Swiss Sovereign Money Initiative.
Reinvent.Money has featured us in one of their episodes.  Click here for highlights.
Our mailing address is:
Postfach 3160
Wettingen 5430

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Vollgeld-Initiative · Postfach 3160 · Wettingen 5430 · Switzerland

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