Sunday, November 30, 2014

Swiss Voters Reject Increasing Gold Reserves In Referendum

Thomas Jordan, president and chairman of the Swiss National Bank (SNB) (Photo credit: Bloomberg News).

Swiss central banker Thomas Jordan says initiative would have hindered monetary policy
Ahead of the gold vote, Swiss National Bank (SNB) president Thomas Jordan commented that the popular vote on requiring the central bank to keep 20% of its assets in gold would hinder the central bank’s ability to conduct monetary policy. In a statement obtained by the Wall Street Journal, Jordan said that “The initiative is both unnecessary and dangerous”, saying further that “It is unnecessary because, under the current monetary order, there is no link between price stability and the share of gold in the SNB balance sheet.” Jordan also pointed out that Switzerland’s stock of gold is high compared with other central banks and that the SNB has no further plans to sell or purchase gold in the future.

Gold standard backers upset with the result
The organizers of the initiative, members of the Swiss People’s Party, say the gold reserve measures were needed because the SNB’s policy of capping the value of the franc has left its balance sheet with a surplus of euros which have been devalued in the wake of the financial crisis. They also have been vocal against the devaluation of the Swiss franc, which is intended to help Swiss exporters and the Swiss economy.

Former U.S. presidential candidate and former congressman Ron Paul, who is also a well-known gold standard backer, came out in favor of the Swiss “yes” camp on expanding central bank gold reserves ahead of the vote, saying in an opinion piece on his website, “The Swiss people appreciate the work their forefathers put into building up large gold reserves, a respected currency, and a strong, independent banking system. They do not want to see centuries of struggle squandered by a central bank”.