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Switzerland to vote on banning banks from creating money

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    Switzerland to vote on banning banks from creating money

    Referendum on giving sole money creation powers to central bank will be held after petition gains more than 100,000 signatures

    Switzerland will hold a referendum to decide whether to ban commercial banks from creating money.

    The Swiss federal government confirmed on Thursday that it would hold the plebiscite, after more than 110,000 people signed a petition calling for the central bank to be given sole power to create money in the financial system.

    The campaign - led by the Swiss Sovereign Money movement and known as the Vollgeld initiative - is designed to limit financial speculation by requiring private banks to hold 100pc reserves.

    "Banks won’t be able to create money for themselves any more, they’ll only be able to lend money that they have from savers or other banks, or even, if necessary, money that the Swiss National Bank has provided them," said the campaign group.

    Under Switzerland's direct democracy, a referendum can be held if a motion gains 100,000 signatures within 18 months of launching.

    If successful, the sovereign money bill would give the Swiss National Bank a monopoly on cash creation, "while the decision concerning how new money is introduced debt free into the economy would reside with the government," says Vollgeld.

    The idea of limiting cash creation to central banks was first touted in the 1930s and supported by renowned US economist Irving Fischer as a way of preventing asset bubbles.

    The SNB was established in 1891, with exclusive power to mint coins and create banknotes.

    But over 90pc of money supply in Switzerland exists in the form "electronic money" created by private banks, rather than the central bank.

    "Due to the emergence of electronic payment transactions banks have regained the opportunity to create their own money," says the Swiss Sovereign Money campaign.

    "The decision taken by the people in 1891 has fallen into oblivion."

    Referenda on Swiss monetary matters are not new. Last year, the country voted by more than 78pc to reject a law calling for the central bank to increase its gold reserves from 7pc to 20pc.

    A date for the referendum has not been set.

    Switzerland to vote on banning banks from creating money - Telegraph

    NAT's gonna get 'em

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