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The Swiss Sovereign Money Initiative

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  2. Economics, Finance, Business & Management
  3. Credit and Capital Markets – Kredit und Kapital
  4. Vol. 51, Issue 4
  5. pp. 621–644

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Assenmacher, K., Brand, C. The Swiss Sovereign Money Initiative. Credit and Capital Markets – Kredit und Kapital, 51(4), 621-644. https://doi.org/10.3790/ccm.51.4.621
Assenmacher, Katrin and Brand, Claus "The Swiss Sovereign Money Initiative" Credit and Capital Markets – Kredit und Kapital 51.4, 2018, 621-644. https://doi.org/10.3790/ccm.51.4.621
Assenmacher, Katrin/Brand, Claus (2018): The Swiss Sovereign Money Initiative, in: Credit and Capital Markets – Kredit und Kapital, vol. 51, iss. 4, 621-644, [online] https://doi.org/10.3790/ccm.51.4.621
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The Swiss Sovereign Money Initiative

Assenmacher, Katrin | Brand, Claus

Credit and Capital Markets – Kredit und Kapital, Vol. 51 (2018), Iss. 4 : pp. 621–644

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Article Details

Publisher Name
Duncker & Humblot
DOI
https://doi.org/10.3790/ccm.51.4.621
Language
English
Pages
24
Keywords

Author Details

Dr. Katrin Assenmacher, European Central Bank, Sonnemannstraße 20, 60314 Frankfurt am Main, E-Mail Katrin.Assenmacher@ecb.europa.eu

Dr. Claus Brand, European Central Bank, Sonnemannstraße 20, 60314 Frankfurt am Main, E-Mail Claus.Brand@ecb.europa.eu

References

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  3. Bernanke, B./Mihov, I. (1996): What Does the Bundesbank Target?, NBER Working Paper, No 5764.  Google Scholar
  4. Bindseil, U. (2004): The Operational Target of Monetary Policy and the Rise and Fall of Reserve Position Doctrine, ECB Working Paper, No 372.  Google Scholar
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  8. Eichengreen, B. (1992): Golden Fetters: The Gold Standard and the Great Depression, 1919–1939, Oxford University Press.  Google Scholar
  9. Federal Finance Administration (2018): Brief Report on Financial Statistics, Berne.  Google Scholar
  10. Fischer, S. (2015): Central Bank Independence. 2015 Herbert Stein Memorial Lecture National Economists Club, Washington, D.C.  Google Scholar
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  12. Friedman, M. (1960): A Program for Monetary Stability. The Millar Lectures. Vol. 3. New York. Fordham University Press.  Google Scholar
  13. Friedman, M. (1992): Money Mischief: Episodes in Monetary History, Harcourt Brace & Company.  Google Scholar
  14. Huber, J./Robertson, J. (2011): Creating New Money: A Monetary Reform for the Information Ages, New Economics Foundation, London.  Google Scholar
  15. Ingves, S. (2017): Do We Need an E-Krona? Sveriges Riksbank, Speech given at the Swedish House of Finance, 08.12.2017.  Google Scholar
  16. Jordan, T. (2018a): Wie Geld durch die Zentralbank und das Bankensystem geschaffen wird, Speech given at Zürcher Volkswirtschaftliche Gesellschaft, Swiss National Bank, 16 January 2018.  Google Scholar
  17. Jordan, T. (2018b): Darum schadet Vollgeld der Schweiz, Speech given at Schweizerisches Institut für Banken und Finanzen der Universität St. Gallen, Swiss National Bank, 3 May 2018.  Google Scholar
  18. Kleinheyer M. (2016): The Chicago Plan Revisited: An Austrian Critique, Procesos de Mercado: Revista Europea de Economía Política, 13 (1), pp. 253–271.  Google Scholar
  19. Laurens, B. J./Arnone, M./Segalotto, J.-F. (2009): Central Bank Independence, Accountability, and Transparency: A Global Perspective, Palgrave Macmillan and International Monetary Fund, New York.  Google Scholar
  20. Lutz, F. (1936): Das Grundproblem der Geldverfassung, Ordnung der Wirtschaft, Vol. 2, Kohlhammer.  Google Scholar
  21. Mayer, T. (2013): A Copernican Turn for Banking Union, CEPS Policy Brief, No 290.  Google Scholar
  22. Schöchli, H. (2018): Die NZZ erklärt die Vollgeld-Initiative, Neue Zürcher Zeitung, 21 March 2018.  Google Scholar
  23. Sigurjónsson, F. (2015): Monetary Reform: A Better Monetary System for Iceland. Report Commissioned by the Icelandic Prime Minister, Reykjavik.  Google Scholar
  24. Simons, H. (1933): Banking and Currency Reform, Manuscript, reprinted in Samuels, W. (ed.) (1990): Research in the History of Economic Thought and Methodology, Archival Supplement, Vol. 4, JAI Press, Greenwich, CT.  Google Scholar
  25. Vollgeldinitiative (2017): Fragen und Antworten zur Vollgeldinitiative, 04.01.2017, 2017_01_Vollgeld_Fragen__web.pdf.  Google Scholar
  26. Bacchetta, P. (2018): The Sovereign Money Initiative in Switzerland: An Economic Assessment, Swiss Journal of Economics and Statistics, 153(3), pp. 1–16.  Google Scholar
  27. Benes, J./Kumhof, M. (2012): The Chicago Plan Revisited, IMF Working Paper WP/12/202.  Google Scholar
  28. Bernanke, B./Mihov, I. (1996): What Does the Bundesbank Target?, NBER Working Paper, No 5764.  Google Scholar
  29. Bindseil, U. (2004): The Operational Target of Monetary Policy and the Rise and Fall of Reserve Position Doctrine, ECB Working Paper, No 372.  Google Scholar
  30. Bundeskanzlei der Schweizerischen Eidgenossenschaft (2018): “Eidgenössische Volksinitiative ‘Für krisensicheres Geld: Geldschöpfung allein durch die Nationalbank! (Vollgeld-Initiative)’”, https://www.bk.admin.ch/ch/d/pore/vi/vis453.html, accessed on 21.07.2018.  Google Scholar
  31. Dawnay, E. (2017): Sovereign Money Initiative: The Background to the National Referendum on Sovereign Money in Switzerland, available at https://www.vollgeld-initiative.ch/fa/img/English/2017_05_02_Referendum_on_Sovereign_Money_in_Switzerland.pdf.  Google Scholar
  32. Douglas, P. H./Fisher, I./Graham, F. D./Hamilton, E. J./King, W. I./Whittlesey, C. R. (1939): A Program for Monetary Reform, at available at http://faculty.chicagobooth.edu/amir.sufi/research/MonetaryReform_1939.pdf.  Google Scholar
  33. Eichengreen, B. (1992): Golden Fetters: The Gold Standard and the Great Depression, 1919–1939, Oxford University Press.  Google Scholar
  34. Federal Finance Administration (2018): Brief Report on Financial Statistics, Berne.  Google Scholar
  35. Fischer, S. (2015): Central Bank Independence. 2015 Herbert Stein Memorial Lecture National Economists Club, Washington, D.C.  Google Scholar
  36. Fisher, I. (1935): 100% Money: Designed to Keep Checking Banks 100% Liquid; to Prevent Inflation and Deflation; Largely to Cure or Prevent Depressions; and to Wipe out Much of the National Debt, Adelphi Company, New York.  Google Scholar
  37. Friedman, M. (1960): A Program for Monetary Stability. The Millar Lectures. Vol. 3. New York. Fordham University Press.  Google Scholar
  38. Friedman, M. (1992): Money Mischief: Episodes in Monetary History, Harcourt Brace & Company.  Google Scholar
  39. Huber, J./Robertson, J. (2011): Creating New Money: A Monetary Reform for the Information Ages, New Economics Foundation, London.  Google Scholar
  40. Ingves, S. (2017): Do We Need an E-Krona? Sveriges Riksbank, Speech given at the Swedish House of Finance, 08.12.2017.  Google Scholar
  41. Jordan, T. (2018a): Wie Geld durch die Zentralbank und das Bankensystem geschaffen wird, Speech given at Zürcher Volkswirtschaftliche Gesellschaft, Swiss National Bank, 16 January 2018.  Google Scholar
  42. Jordan, T. (2018b): Darum schadet Vollgeld der Schweiz, Speech given at Schweizerisches Institut für Banken und Finanzen der Universität St. Gallen, Swiss National Bank, 3 May 2018.  Google Scholar
  43. Kleinheyer M. (2016): The Chicago Plan Revisited: An Austrian Critique, Procesos de Mercado: Revista Europea de Economía Política, 13 (1), pp. 253–271.  Google Scholar
  44. Laurens, B. J./Arnone, M./Segalotto, J.-F. (2009): Central Bank Independence, Accountability, and Transparency: A Global Perspective, Palgrave Macmillan and International Monetary Fund, New York.  Google Scholar
  45. Lutz, F. (1936): Das Grundproblem der Geldverfassung, Ordnung der Wirtschaft, Vol. 2, Kohlhammer.  Google Scholar
  46. Mayer, T. (2013): A Copernican Turn for Banking Union, CEPS Policy Brief, No 290.  Google Scholar
  47. Schöchli, H. (2018): Die NZZ erklärt die Vollgeld-Initiative, Neue Zürcher Zeitung, 21 March 2018.  Google Scholar
  48. Sigurjónsson, F. (2015): Monetary Reform: A Better Monetary System for Iceland. Report Commissioned by the Icelandic Prime Minister, Reykjavik.  Google Scholar
  49. Simons, H. (1933): Banking and Currency Reform, Manuscript, reprinted in Samuels, W. (ed.) (1990): Research in the History of Economic Thought and Methodology, Archival Supplement, Vol. 4, JAI Press, Greenwich, CT.  Google Scholar
  50. Vollgeldinitiative (2017): Fragen und Antworten zur Vollgeldinitiative, 04.01.2017, 2017_01_Vollgeld_Fragen__web.pdf.  Google Scholar

Abstract

On 10 June 2018, Switzerland voted against a constitutional amendment to introduce a system of sovereign money or Vollgeld. The proposal foresaw that all money be created by the central bank and that commercial banks be banned from creating demand deposits. Demand deposits would have been required to be held in off-balance sheet accounts at commercial banks. We discuss the specific features of this proposal and compare them to its historical predecessor, the Chicago plan. We argue that the Swiss initiative would not have tangibly enhanced financial, monetary, and economic stability. Specifically, if implemented earlier, it would not have addressed the root causes of the Global Financial Crisis and would have been ineffective in changing its course and its consequences for Switzerland. Though the Vollgeld proposal would have turned commercial bank into central bank money, close-money substitutes would likely have remained on the liability side of commercial bank balance sheets. Vollgeld would also unlikely have redeemed promises of ancillary effects such as a reduction in public debt, more sustainable economic growth, and less complex regulation. Forestalling and tackling financial imbalances requires limiting leverage and safeguarding liquidity buffers through bank-level and system-wide rules and regulation.

Table of Contents

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Katrin Assenmacher / Claus Brand: The Swiss Sovereign Money Initiative 1

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