Switzerland prepares to vote on sovereign money


Big news this:

On 10th June 2018 Switzerland will be the first country in the world to have a national referendum on the introduction of Sovereign Money. A referendum result that is as positive as possible in Switzerland will help monetary reformers worldwide to make significant progress. However, our opponents are powerful and will try to scare the Swiss electorate. It is essential for us and the international movements that we prevent a false picture of the Sovereign Money Initiative from becoming established in the public debate. The surveys conducted have shown that well-informed Swiss voters are clearly in favour of sovereign money. Unfortunately, however, we lack the funding we need to reach all Swiss households. In order to get the most out of this unique opportunity not just for Switzerland but for all other sovereign money movements throughout the world, we urgently need your help. Please donate as much as possible in the coming days so that we can expand the campaign whilst we have time.

The aim of the Swiss Sovereign Money Initiative is to reform the banking and money system to work the way that most people would like, which happens to also be the way that most people believe it already works:

• The Swiss National Bank would be the sole organisation authorised to create money – not only cash and coins, but also the electronic money in our bank accounts.

• The banks would provide all the services as they do now including bank accounts, payment transactions and loans. They just won’t be able to create money anymore. The main advantage of this reform would be a fairer and more stable banking system:

• The harmful build-up of over-indebtedness in the economy would no longer be a necessary byproduct of the system, therefore making banking crises less likely. • Money would no longer ‘disappear’ in a major banking crises (where several large banks go bankrupt).

• Taxpayers would no longer have to bailout banks in the event of a crisis.

• The advantages from money creation would go to the public, rather than to the banks. The government would then decide whether to use additional revenues to lower taxes, pay off the national debt, fund additional infrastructure or services, or pay a dividend directly to all citizens.

• The changes to the banking system will not change the way that banks’ customers will interact with banks or the services they offer . There will be a binding national referendum on the implementation of this Sovereign Money Initiative in Switzerland in the next year or so.

What is sovereign money? Sovereign money is full-value legal tender which is created and brought into circulation by public institutions, typically a central bank, rather than private banks. Currently coins and banknotes are the only forms of sovereign money available to the public. The money in people‘s bank accounts is neither sovereign money nor legal tender.

What is electronic money? It‘s the numbers in bank accounts, also known as „book money“. Currently the money in people‘s bank accounts is not created by the Swiss National Bank, but by private banks when they make loans. This “virtual” money on our bank accounts isn‘t legal tender, it‘s just a promise made by the banks to pay us cash and settle payments on our behalf, when requested. Legally it belongs to the bank, not to the holder of the bank account.

What is a Swiss initiative? Its Switzerland’s system of direct democracy: if 100,000 people sign an official petition for a change to Switzerland’s written constitution, there has to be a binding national referendum on the proposed change.

Modern Monetary Theory writ large. As Western democracies descend into inequality civil wars driven by private banking who is to say it won’t happen?

Only in a direct democracy is such a novel idea possible.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.