Swiss upper house rejects ban on SNB gold sales

ZURICH, March 6 Thu Mar 6, 2014 9:07am EST

ZURICH, March 6 (Reuters) - Switzerland's upper house on Thursday rejected a popular initiative that would prohibit the Swiss National Bank from selling any of its gold reserves, saying the proposal could hamper the central bank's ability to fulfil its mandate.

The "Save our Swiss gold" proposal was brought forward by the right-wing Swiss People's Party (SVP), which wants to ban the central bank from offloading its reserves and oblige it to hold at least 20 percent of its assets in gold.

Finance Minister Eveline Widmer-Schlumpf said in front of the upper house that the SNB's independence helped it to maintain price stability, whereas the initiative would reduce its room for manoeuvre when shaping monetary policy.

"If the SNB's gold reserves represented a substantial part of its balance sheet ... this would hamper the SNB's ability to act and might prevent it from fulfilling its constitutional mandate," she said.

Although the SVP gathered the 100,000 signatures needed to force a referendum on the issue, a popular vote on the proposal may be years off. Both houses of parliament must first decide whether to back or reject the proposal.

The lower house has yet to vote on the initiative.

The Swiss government recommended voting against the proposal and Swiss National Bank Chairman Thomas Jordan has spoken out against it.

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