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Swiss Voters Strongly Reject Money Reform Proposal

11 June 2018

Potential risks to the Swiss economy by introducing a "Vollgeld" system convinced voters to reject the proposal, leaving private banks with the right to create money.

The Vollgeld Initiative, also known as Sovereign Money, attracted worldwide attention because it would have upended the banking system in a country known for its banks. The slogan reads "Dear Swiss National Bank, please remember why we founded you". A final result is expected around 1500 GMT.

This is on the minds of Swiss voters this weekend, as they go to the polls for a referendum on whether to adopt a "sovereign money" system.

Critics of so-called "fractional reserve banking", where banks only hold a percentage of what they lend in deposits have included heavyweights such as former Bank of England governor Mervyn King. Financial institutions in Switzerland and around the world create electronic money every day when they lend money to households and businesses. But the Swiss aren't the only ones thinking about new forms of money.

But opponents, including the SNB, Swiss government and the banks, have said the plan was a risky experiment which could damage the Swiss economy.

FILE PHOTO: A member of the sovereign money initiative, a referendum campaign that would abolish traditional bank lending and allow only money created by the Swiss National Bank (SNB), offers flyers to travellers at the central railway station in Zurich, Switzerland May 3, 2018.

But opponents claimed Switzerland could make more money by issuing concessions to foreign companies that agree to be regulated and taxed, and charge the law is basically a windfall for Swiss casinos.

The Swiss government says the Gambling Act, which has already been passed by both houses of parliament, updates legislation for the digital age, while raising protections against addiction.

Herbert Scheidt, chairman of the Swiss Bankers Association, said the financial sector had shown humility since the crisis, and the system had been made "very secure".

Opponents have slammed Bern for employing "methods worthy of an authoritarian state", with a measure that they claim is "censorship of the internet".

"Swiss casinos have won the jackpot" with the new law, Isabelle Chevalley of the Liberal Green Party, told public broadcaster RTS after the vote. "Our goal is that money should be in the service of the people and not the other way around and we will continue to work on it".

Swiss Voters Strongly Reject Money Reform Proposal