Federal Council rejects gold initiative
Bern, 20.11.2013 - During its meeting today, the Federal Council adopted the dispatch on the popular initiative "Save our Swiss gold (gold initiative)". It recommends rejecting the initiative without a counterproposal. Acceptance of the initiative would restrict the ability of the Swiss National Bank (SNB) to act. It would make it more difficult for the SNB to pursue a monetary policy that ensures price stability and contributes to stable development of the economy. Furthermore, profit distributions to the Confederation and to the cantons would be adversely affected.
The initiative calls for the SNB to hold at least 20% of its assets in gold and stipulates that these gold reserves may not be sold in the future. It also makes it mandatory for the gold reserves to be held in Switzerland.
The initiators believe that gold reserves generally increase monetary stability. However, gold has not played a direct role in the stability of currencies for quite some time now. The SNB is tasked with ensuring price stability while taking the development of the economy into consideration. There is no connection, however, between price stability and the proportion of gold on the SNB's balance sheet. On the contrary, price stability is ensured by the fact that the SNB, as an independent institution, supplies the economy with an appropriate amount of money and maintains trust in the stability of the franc's value by means of a clear and transparent monetary policy. A high and inalienable proportion of gold in the SNB's assets would significantly interfere with monetary policy and thereby be a hindrance in fulfilling its statutory mandate.
In the case of monetary policy measures to protect the Swiss economy, the adverse effects of the initiative on the structure of the SNB's balance sheet would have to be taken into account from the outset. Monetary policy would be hampered by this. Measures such as the policy of an exchange rate floor against the euro or extensive precautions to safeguard financial stability could no longer be announced and implemented with the same determination.
With 1,040 tonnes, Switzerland currently has considerable gold reserves by international standards. This plays an important role within the framework of the diversification of the SNB's currency reserves. Taken alone, however, gold is one of the most volatile and therefore riskiest investments on the SNB's balance sheet. Consequently, the investment risk would rise with a high proportion of gold, but the return would decline, as gold does not generate revenue flows in the form of interest or dividends. Moreover, it would be impossible to realize any valuation gains on the gold because of the ban on selling it. The diminished revenue potential would also result in smaller profit distributions to the Confederation and to the cantons.
Acceptance of the initiative would restrict the SNB's ability to act. However, the SNB's independence and ability to act are necessary prerequisites in order for it to fulfil its constitutional mandate also in the future. The Federal Council is thus proposing to parliament that it recommend rejection of the initiative to the people and the cantons.Address for enquiries
Serge Gaillard, Director of the Federal Finance Administration FFA
tel. 031 322 60 05, serge.gaillard@efv.admin.ch
Alain Geier, Federal Finance Administration FFA
tel. 031 322 62 39, alain.geier@efv.admin.ch
Documents
Publisher
The Federal Council
https://www.admin.ch/gov/en/start.html
Federal Department of Finance
https://www.efd.admin.ch/efd/en/home.html
