ZURICH, May 3 (Reuters) - Switzerland risks being plunged into an “unnecessary and dangerous experiment” if it adopts a radical sovereign money scheme in a referendum next month, Swiss National Bank Chairman Thomas Jordan said on Thursday.
In his latest broadside, Jordan told an audience in Zurich he firmly opposes the initiative, which will be put to voters on June 10 under Switzerland’s system of direct democracy.
“A sovereign money system would hurt our country as a whole and also make it difficult for the Swiss National Bank to fulfill its mandate,” Jordan said in his prepared remarks.
“Sovereign money is an unnecessary and dangerous experiment, which would inflict great damage on our country,” said Jordan, adding the parliament and government oppose the plan as well.
The sovereign money plan, which has gathered more than the 100,000 signatures needed to trigger a binding referendum, proposes barring commercial banks from ‘creating’ new electronic money every time they give credit, with only the SNB allowed to increase the money supply.
Campaigners say the SNB now provides only around 10 percent of the money in circulation, which includes notes and coins as well as the money it holds on sight for commercial banks.
The rest is generated by the banks, which in future would only be able to lend money placed with them in long-term savings accounts, or borrowed from the SNB or elsewhere.
Supporters claim the changes would make the financial system more secure and reduce the need for taxpayer bailouts of banks.
Jordan has clashed with supporters who have said he should remain neutral in the debate ahead of the vote.
In his speech on Thursday, he acknowledged the “noble goal” of the initiative but said there were better ways to achieve financial stability.
The changes would make granting credit more difficult and also make it harder for the SNB to conduct monetary policy., an subject Jordan did not elaborate on in his speech.
“Adoption of the initiative would represent a tectonic shift in our monetary and economic system, which has developed over a period of many years,” he said. (Reporting by John Revill, Editing by Michael Shields)
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