SWISS TO VOTE ON A SEISMIC SHIFT TO THEIR BANKING SYSTEM
Positive Money New Zealand, a not for profit enterprise advocating a change to our banking and monetary system is eagerly awaiting the result of a referendum in Switzerland on the 10th June that has the potential to shake up the international banking system.
Don Richards, National Spokesperson for Positive Money says “On the face of things, the referendum appears innocuous enough as it proposes that the Swiss Central Bank issues the Swiss currency”. It currently does that for the notes and coins which constitute 10% of the money in circulation while the other 90% is created by private banks at the click of a button to finance loans, mortgages and financial products.
This means that the money in a Swiss citizen’s bank account is not legal tender, in fact it is not even their money. It is a liability of the bank to the account holder and the bank promises to provide the money, when asked to. This does not comply with the intention of Article 99 of the Swiss constitution which states that the money and currency system is a matter of the state.
Some people say that if it ain’t broke, don’t fix it. An IMF discussion paper titled The Chicago Plan Revisited, issued in 2014, said that bank’s ability to create money ex nihilo (out of nothing) created instability through boom and bust cycles. In addition, the paper said there was the possibility of runs on the bank as the banks liabilities exceeded the amount of available credit.
If that was not bad enough, as 90% of the money in circulation was created to finance loans, overdrafts and financial products, the system requires more people to get in debt than pay off their debt for it to work. This is unsustainable.
According to the IMF discussion paper, a system where the central Bank issued the currency would smooth out the boom and bust cycles, eliminate runs on the bank and dramatically reduce both public and private debt. In addition, it would provide productivity gains of 10% and steady state inflation dropping to zero.
There would still be a role for the banks as they would continue to offer all of the normal financial services but wouldn’t have the unfair and disruptive ability to create the money that they lend out.
Richards says “The rest of the world is watching what happens in Switzerland as most banking systems, including our own, operate under the same system and it is time for a change.”
For information, contact Don Richards National Spokesperson for Positive Money New Zealand
Email address hm email@example.com
Cell: 0274 778 147
Phone wk: 07 307 1158
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