Authorities in Switzerland are looking to hold an upcoming referendum in order to decide whether or not they will proceed with banning commercial banks from creating money. The government confirmed that it would hold the referendum after a petition received more than 110,000 signatures that called for the central bank to be given the sole power to create money.
The campaign is being led by the Swiss Sovereign Money movement, and they are looking to limit financial speculation by requiring private banks to hold 100 per cent reserves against their deposits. “Banks won't be able to create money for themselves any more, they'll only be able to lend money that they have from savers or other banks,” said the group. If they are truly interested in ending fractional reserve banking then that would mean that they are finally ready to move in the direction of sound banking methods.
What would be best for currency is competition, but that isn't exactly what the group is seeking to do. However, what they are looking to do, is a lot better than the present way of doing things. The idea of their initiative is to limit all money creation to central banks. Currently, fractional reserve banking allows banks to lend out far more than they have in reserves, and we've seen on countless occasion that this leads to financial disaster.
Historically, central banks have touted the mission statement that they seek to strengthen and support the economy and value of the dollar, but we have seen quite the opposite from banks like the Federal Reserve. Central banks in Canada, the United States, and other countries, have managed to deteriorate the purchasing power of money the longer that they are allowed to operate.
The Federal Reserve in the U.S. alone has already caused the loss of over 96 per cent purchasing power for the dollar, and likewise in Canada the loonie has also lost over 90 per cent of its own purchasing power. Thus far, a date hasn't been set for the Swiss referendum.
What Is Fractional Reserve Banking?
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