First de-pegging from the Euro, now Switzerland is voting to end private central banking

For decades, Switzerland has been known as the banking capital of the world due to their neutrality, and long history of protecting wealth from the prying eyes of governments.  And although they recently gave into U.S. pressures for transparency of accounts owned by American citizens, two major policy decisions may be separating themselves once again from the pack in the Western financial system.

Back in January, the Swiss government de-pegged the Franc from the Euro, causing a temporary setback in their economy due to the strength of their own, and the weakness of their formerly pegged to currency.  But a new referendum that is being initiated may change all of this, and help the country overcome negative interest rates that their central bank forced upon the Swiss economy.

A radical initiative to strip private banks of their power to “create money” and make it exclusively a central bank privilege has gathered enough support for the Swiss government to announce a referendum on the issue. A vote in favor may result in a return to 100 percent reserve banking.

“Banks won’t be able to create money for themselves anymore, they’ll only be able to lend money that they have from savers or other banks, or even, if necessary, money that the Swiss National Bank has provided them,” the campaign said in astatement on their petition website.

As soon the petition concerning changes to the Swiss banking system had received more than 100,000 valid signatures, the Swiss government confirmed it would hold the referendum, according to the Telegraph. The date when the country will vote to decide whether private banks should be keep their power of creating money has not yet been set.

The move comes as part of the Swiss Sovereign Money Initiative (known as the Vollgeld-Initiative in German) that seeks to put an end to financial speculations. The group is concerned with the current state of affairs in traditional fractional reserve banking, where real coins, banknotes and central bank liabilities account for only a minor part of money in circulation, while most of it exists as electronic cash created by private banks. – Russia Today

Few people realize just how destructive fractional reserve banking and private money creation is to a nation or economy, as history has shown with the inceptions of the Federal Reserve and the ECB.  In less than 20 years after the creation of both, the U.S. and Europe fell into dire financial crises that brought about major recessions and depressions as the ability to print excess money based on debt inevitably results in uncontrollable speculation and monetary destruction.

fredgraph

US 20 years after creation of the Federal Reserve

 

euro

Europe 10 years after creation of the Euro

When it comes to monetary policies, Switzerland has more often than not been ahead of the curve, and one of the first to recognize when bad fiscal programs need to be changed, adapted, or scrapped.  And as a leader in the global banking industry, a yes vote to remove the power to create money from a private central bank could very quickly see this trend occur in even more nations, and return the power over monetary policy back to the place it should have always resided in.

Kenneth Schortgen Jr is a writer for Secretsofthefed.comExaminer.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.

Loading Facebook Comments ...