April 27, 2018 / 11:28 AM / 3 months ago

Swiss central bank chief says sovereign money would bring 'great uncertainty'

BERN (Reuters) - A switch to so-called sovereign money risks plunging Switzerland into “great uncertainty”, Swiss National Bank (SNB) Chairman Thomas Jordan said on Friday, ahead of a June 10 referendum on the issue.

Swiss National Bank (SNB) Chairman Thomas Jordan attends the shareholders meeting of the SNB in Bern, Switzerland, April 27, 2018. REUTERS/Denis Balibouse

The sovereign money initiative aims to bar commercial banks from creating money electronically and reserve for the SNB the sole right to create money in Switzerland. The proposal will be put to voters under the country’s system of direct democracy.

The SNB, the Swiss parliament and the government oppose the scheme, which would make Switzerland a guinea pig for a new financial system that has never been tried elsewhere.

“Switching to an untested sovereign money regime would radically transform Switzerland’s tried-and-tested financial framework,” Jordan told the SNB’s annual general meeting.

“Given the lack of empirical data and comparable systems worldwide, such a transformation risks plunging Switzerland into a period of great uncertainty,” he said.

Supporters of the initiative, who have gathered the 100,000 signatures needed to trigger a vote, say their proposals will make the Swiss banking system more secure and less complicated.

A Tamedia poll published on Friday showed 42 percent of voters back the initiative and 45 percent are against.

Campaigners said the SNB should not tell people how to vote.

“The SNB can give their expertise when the proposals are being discussed, but now that we are in the campaigning phase they should be strictly neutral,” said Martin Alder, an economist and member of the sovereign money campaign.

He accused Jordan of abusing his position in the debate, and said he should resign if he wanted to campaign.

“The SNB has been in the forefront of the campaign against our proposal, but it is for the people to decide the issues. The SNB should refrain from campaigning for one side or the other.”

Jordan countered by saying the SNB had a duty to comment on issues which directly affected the central bank and the Swiss financial system.

Reporting by John Revill; Editing by Gareth Jones

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