SNB president criticises Swiss Gold referendum
Thomas Jordan (pictured), president of the Swiss national bank (SNB) has expressed criticism of the Swiss initiative for an increase in gold assets, which will be decided by referendum on 30 November.
The Swiss gold referendum, initiated by the Swiss People’s Party (SVP), would require the SNB to increase its gold reserves from currently 8% to 20% and to not sell any gold in future. The referendum also foresees that Swiss gold reserves stored in Canada and the UK should be returned.
The referendum was initiated in response to the SNB’s project of purchasing Euro’s in order to maintain the exchange rate of the Swiss Franc and to prevent further appreciation. As a result of the SNB’s euro purchases over the last two years, its balance sheet has expanded by 45% this year alone.
Anticipating liquidity constraints as a result of potential gold acquisitions, Jordan responded: “Even well-meaning interventions may therefore have grave consequence for our country and the entire population. Examples of profound reforms of this kind are the use of private money instead of state money, the return to a gold standard, the introduction of plain money and the adoption of foreign money. From today’s perspective, these four reform ideas are unsuited to making our sound money even better.”
Switzerland currently has the seventh highest level of gold reserves globally. According to SNB estimates, the central bank would have to acquire another CHF70bn in gold in order to implement the requirements of the referendum.