November 16, 2014 / 12:15 PM / in 5 years

SNB head says no sovereign fund for gold if referendum passes -paper

ZURICH, Nov 16 (Reuters) - The chairman of the Swiss central bank ruled out creating a sovereign wealth fund to manage Switzerland’s gold reserves if a referendum on banning the bank from selling them passes, according to a newspaper interview published on Sunday.

The “Save our Swiss gold” proposal, spearheaded by the right-wing Swiss People’s Party (SVP), will be put to a plebiscite on Nov 30.

It aims to ban the central bank from offloading the reserves and oblige it to hold at least 20 percent of its assets in gold.

Opinion polls suggest the initiative will fail, but it has sent jitters through the gold and currency markets as, in the event it did pass, it would require the Swiss National Bank (SNB) to massively bolster its holdings of the metal.

Asked whether the SNB could set up a fund to manage its gold, chairman Thomas Jordan said such move - which some currency dealers have speculated about - was “unthinkable”.

“The SNB cannot simply use some tricks to circumvent the will of the people. I rule that out categorically,” he told weekly paper Sonntagszeitung.

Jordan also renewed the SNB’s criticism of the proposal, which he said would fuel unemployment, increase the risk of recession and threaten the bank’s efforts to keep the Swiss franc capped against the euro.

The franc last week hit its strongest level against the euro in more than two years, putting the cap under pressure.

Since introducing the cap in September 2011, the SNB has repeatedly promised to defend it, saying it could intervene in currency markets or impose negative interest rates if necessary.

“The cap is currently our main policy tool to fulfill our mandate of price stability,” Jordan told Sonntagszeitung. (Reporting By Katharina Bart; editing by John Stonestreet)

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