The Swiss People’s Party, a nationalist political party in Switzerland, has succeeded in getting the required number of signatures to put a gold referendum on the national ballot. The “Save Our Swiss Gold” initiative, if passed by voters, would require the Swiss central bank to double its gold reserves from 10% to 20% and repatriate all gold reserves held abroad. The measure would also forbid the sale of any gold reserves.
This would make the gold reserves worthless to the bank, according to Thomas Jordan, chairman of the governing board of the Swiss National Bank. He explained that if the gold was unsellable, it could not be counted as an asset at all, while still tying up 20% of the central bank’s reserves. He warned that the bank would have to issue treasury bills and pay interest on them in order to manage the money supply, and would lead to printing more money.
Jordan also revealed for the first time where Switzerland’s gold reserves are held – another demand by the Swiss People’s Party. Switzerland has a total of 1,040 tonnes of gold, with 70% in Switzerland, 20% in the Bank of England, and 10% in the Bank of Canada. Jordan said that keeping a portion of the nation’s gold reserves abroad was necessary for “adequate regional diversification and good market access.” Central banks will keep reserves in foreign central banks for use as collateral when buying foreign currencies.
(Centralbanking.com was used as a resource for this article)