Switzerland to hold national referendum on central bank’s gold reserves policy

Switzerland will be holding a national referendum sometime in the next several weeks on what the Swiss National Bank (SNB) should do with its gold reserves. The government confirmed Thursday that the Swiss Peoples Party (SVP) had the necessary 100,000 signatures for its petition to stage a referendum (106,052).

As Global Gold News reported late last month, the group urged the federal government to confirm where the gold reserves are presently being held and amend the constitution so the SNB has a minimum of 20 percent of its assets in gold. The organization contends that gold maintains the value of the Swiss franc.

Between 2000 and 2008, the SNB had sold off a tremendous amount of its gold for low prices as part of an agreement among central banks to reduce their reserves of the yellow metal. As of 2012, the SNB has 1,040 tons of gold valued at 50 billion Swiss francs ($53.76 billion), which is roughly 10 percent of its assets.

The SNB has yet to comment on the initiative. Economists say that the SNB would have reservations regarding the measures being proposed and the effects it would have on how it handles monetary policy.

“It’s not the ban on the sales of gold that is problematic, but rather the requirement to hold 20 percent of its assets in the metal,” said Alessandro Bee, an economist at Bank Sarasin & Cie in Zurich, in an interview with the Fox Business Network (FBN). “The 20 percent requirement would force the SNB to expand its balance sheet further, and this would make its conduct of monetary even more difficult.”

Despite the victory of attaining a referendum, experts say it will be several years before a popular vote by elected representatives can even be taken. One government spokesperson said it would take at least 42 months to garner a vote.

“This has a long way to go yet, and may not be passed when the referendum does happen,” Macquarie Bank, precious metals analyst Matthew Turner, told the news organization. “If it did, it would be incredibly bullish, a rocket for gold prices as we are talking about huge purchases that would have to be made. But the Swiss National Bank will not want its reserves policy to be determined by referenda and this proposal will be countered.”

It was reported earlier this month that Cyprus would be selling 400 million euros worth of its gold reserves in order to finance its share of the bailout.

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