The Swiss National Bank (SNB) on Sunday repeated its opposition to a proposal that would force the central bank to boost its gold reserves, with just a week to go until Switzerland votes on the issue. The Nov. 30 vote, called by the right-wing Swiss People’s Party (SVP), is aimed at preventing the SNB from offloading its gold holdings. It would also require the central bank to bring back gold parked abroad and to hold at least 20 percent of its assets in gold, compared with 7.8 percent last month. Higher gold holdings would escalate costs for the SNB and impair its ability to intervene freely in the currency market. The chairman of the SNB, which has stepped up its campaign against the proposal in the weeks leading up to the vote, warned of the consequences of a ‘yes’ vote. “The initiative is dangerous because it would weaken the SNB,” Thomas Jordan said in remarks prepared for a public speech at a church in Uster, near Zurich.
“The connection between a minimum share and a ban on selling which it embraces would very greatly restrict our monetary policy room for maneuver,” Jordan said, adding that the central bank had no plans to either buy or sell gold.
Jordan said the terms of the initiative could hamper the SNB’s efforts to implement its minimum exchange rate at 1.20 francs per euro, currently one of its central policy tools.
If adopted, the SVP’s “Save our Swiss gold” initiative would force the SNB to buy gold for each euro it purchases to weaken the franc, making its interventions much more expensive.