Swiss upper-house votes down proposal to ban central bank gold sales – lower-house yet to vote
Cast you minds back to 2011, and to a couple of articles we wrote regarding a grass-roots attempt in Switzerland to back the Swiss Franc with gold and limit the amount of gold the Swiss central bank sell.
July 13th 2011: Is Switzerland planning a return to the gold standard?
The Swiss People’s Party, who have steadily been gaining in the national vote since 1971 and are now the biggest party in Switzerland, have been campaigning for the reintroduction of the gold backed Swiss Franc. It now seems that their campaigning effort has paid off and later in the year or early in 2012 the Swiss parliament will vote whether a new Swiss Franc backed by gold should be introduced.
Up until 1999 the Swiss currency was still backed by gold as required by their constitution. However, in 1999 the people voted to change the constitution with one of the amendments getting rid of the necessity of the Franc to the gold backed.
The vote in 1999 was a narrow one with some 59% voting for the changes. A lot has happened in the world of money and finance since then and the likelihood that the SPP can get enough votes would seem pretty high judging by their increase in support over the past 12 years.
So just what is being proposed? That the Swiss constitution shall be amended as follows:
“Article 99, section 2, the federal government shall create a Swiss gold Franc with a set of coins with a fixed content of gold, it regulates the licenses of institutions that may issue gold Francs tax free”…
…It would appear that at the start the idea is that the unbacked Franc and new gold backed Franc will work alongside each other. We’re sure if Tom Gresham were around today he might have a thing or two to say about whether this will work. Gresham came up with his own law that ; “bad money drives out good” – or in other words people will want to naturally get rid of their unbacked Francs and will hoard their gold backed Francs.
However it might be stepping stone to a full backed currency in time.
What stands out the most about this incentive is that it is coming from the grass roots and is certainly not backed by either the Central bank of Switzerland or the status quo politicians – usually a good gauge whether something is a good idea or not.
Carrying on the Swiss theme this morning we now get news that the Swiss People’s Party are campaigning to hold a referendum in Switzerland on whether their central bank should back 20% of their assets with gold (currently it stands at 16%). By comparison just 4% of the UK central bank’s balance sheet is gold backed.
The title of the campaign is “save the Swiss gold” and as well as the 20% backing mentioned above they are also trying to make it unconstitutional to sell any more of their 1000 tons of gold that they hold. This is after the Swiss central bank sold half of all of Switzerland’s gold over the past ten years. Sound familiar Mr Brown?
Well the SVP (Swiss People’s Party) did manage to get 100,000 signatures for the proposal to stop the Swiss central bank from selling anymore gold. This triggered two things, it meant that the Swiss parliament would have to take a vote on the proposal and it guaranttes that the Swiss people will get to vote on the proposal as well in a referendum on the issue – as yet the date for such a people’s vote seems still a long way off.
Now fast forward to today, finally the upper-house of the Swiss parliament took a vote on the gold proposal and promptly rejected it. Courtesy of Reuters:
(Reuters) – Switzerland’s upper house on Thursday rejected a popular initiative that would prohibit the Swiss National Bank from selling any of its gold reserves, saying the proposal could hamper the central bank’s ability to fulfil its mandate.
Ah, there’s that excuse again, ‘hampering the central bank’s mandate’ – what they really mean is that the proposal would hamper the central bank’s ability to steal the wealth of the people through dilution of the money supply (AKA: money printing).
The “Save our Swiss gold” proposal was brought forward by the right-wing Swiss People’s Party (SVP), which wants to ban the central bank from offloading its reserves and oblige it to hold at least 20 percent of its assets in gold.
Note that anything gold related these days gets labeled ‘right-wing’, which baffles us, what is possibly ‘right-wing’ about wanting to have real money instead of using government fiat paper?
Finance Minister Eveline Widmer-Schlumpf said in front of the upper house that the SNB’s independence helped it to maintain price stability, whereas the initiative would reduce its room for manoeuvre when shaping monetary policy.
And there’s another great word that is always used in conjunction with central banking, ‘independence’. Ron Paul came up with the best suggesting regarding this word, he said that every-time you hear someone say independent when talking about central banks, simply change the word independent to ‘secret’ and what ever is being said starts to make a lot more sense.
“If the SNB’s gold reserves represented a substantial part of its balance sheet … this would hamper the SNB’s ability to act and might prevent it from fulfilling its constitutional mandate,” she said.
The constitutional mandate to print a currency into oblivion? We’re pretty sure that’s not in their constitution – in fact, up until 1999 that very same constitution stated that the currency had to be backed by gold.
Although the SVP gathered the 100,000 signatures needed to force a referendum on the issue, a popular vote on the proposal may be years off. Both houses of parliament must first decide whether to back or reject the proposal.
No doubt this referendum vote is being delayed for as long as possible because when the people actually get to decided what kind of money they use, they will most likely limit the amount of gold that the SNB can sell.
Also keep any eye on the results out of the lower-house where the SVP party actually have the most amount of seats and where a ‘yes’ vote is much more likely than the upper-house.
The lower house has yet to vote on the initiative.
Link to this article: : http://www.goldmadesimplenews.com/gold/swiss-upper-house-votes-down-proposal-to-ban-central-bank-gold-sales-lower-house-yet-to-vote-12581/