Swiss to vote on the Sovereign Money Initiative on 10th June 2018
Berne - The Swiss Federal Council has just announced the date of the referendum on the Sovereign Money Initiative (or "Vollgeld-Initiative" in German) will be 10th June 2018. Swiss voters will be asked who should be allowed to create new Swiss francs: UBS, Credit Suisse and other private commercial banks or the Swiss National Bank which is obliged to act in the interest of Switzerland as a whole.
The announcement from the Swiss Federal Council can be viewed in German or French or Italian here.
The arbitrary way in which commercial banks can create money leads to credit bubbles, an unstable financial system and excessive indebtedness according to well-known scientists and economists. Electronic money brought into existence by commercial banks is displacing cash more and more: currently only 10 per cent of the money in circulation in Switzerland – namely the coins and banknotes – is brought into existence by the Swiss National Bank.
The Sovereign Money Initiative proposes a change to the Swiss constitution to make the banking system function in the way that most people already believe it functions. The Swiss National Bank (SNB) should create not only the Swiss franc coins and bank notes as it does now, but also electronic Swiss francs (i.e. money in bank accounts). Banks should only be allowed to lend money that they have received from savers, investors or the SNB, and they should no longer be allowed to create money for their own use themselves.
The main advantages of the Sovereign Money system are that:
- the money in private accounts is as safe as cash in a vault and it doesn’t disappear if a bank goes bankrupt
- the Swiss National Bank will be in a better position to prevent asset bubbles and financial crises
- the proceeds from money creation will benefit the general public.
The Sovereign Money Initiative has been initiated by the independent association Monetäre Modernisierung (MoMo), an NGO with no affiliations to political parties. The people in MoMo have been working, mostly in a voluntary capacity, to transfer the billion-dollar privilege currently enjoyed by the banks to the Swiss National Bank for the benefit of the Swiss people. They are advised by experts with a broad range of expertise on their scientific advisory board.
Sovereign money is full-value legal tender which is created and brought into circulation by public institutions, typically a central bank, rather than private banks. Currently coins and banknotes are the only forms of sovereign money available to the public. The money in people‘s bank accounts is neither sovereign money nor legal tender.
What is electronic money?
It‘s the numbers in bank accounts, also known as „book money". Currently the money in people‘s bank accounts is not created by the Swiss National Bank, but by private banks when they make loans. This „virtual" money on our bank accounts isn‘t legal tender, it‘s just a promise made by the banks to pay us cash and settle payments on our behalf, when requested. Legally it belongs to the bank, not to the holder of the bank account.
What is a Swiss people's initiative?
It's Switzerland’s system of direct democracy: if 100,000 people sign an official petition for a change to Switzerland’s written constitution, there has to be a binding national referendum on the proposed change.