</noinclude>{{Use dmy dates|date=February 2014}} {{Use British English|date=February 2014}} {{Infobox referendum | name = Swiss referendum of June 2018<br/>on money creation <br/>("Sovereign Money Initiative") | title = ''Do you accept the popular initiative "for crisis-safe money: money creation by the National Bank only! (Sovereign Money Initiative)"?''<ref name=admin>{{cite news |date=28 March 2018 |title=Popular initiative: "For crisis-safe money: Money creation by the [Swiss] National Bank only! (Sovereign Money Initiative)" |url=https://www.admin.ch/gov/en/start/documentation/votes/20180610/Sovereign-Money-Initiative.html |work=Swiss government website |access-date=14 April 2018}}</ref> | image = | image_width = | image_alt = | caption = | location = Switzerland | date = 10 June 2018<ref name=June2018/> | yes = 442387 | no = 1379448 | total = | electorate = | voter_registration = no | map = | mapdivision = canton | mapcaption = | notes = | voting_system = | width = | barwidth = 200px | status = | part1_subject = | part1_choice1 = Yes | part1_percentage1 = 24.28 | part1_color1 = | part1_choice2 = No | part1_percentage2 = 75.72 | part1_color2 = | part1_choice3 = Blank<ref group=note name=Blank-null>In Switzerland, blank or null votes are counted but not considered valid. Only 'yes' and 'no' votes are considered to calculate the majority. See also the [https://www.bfs.admin.ch/bfs/fr/home/statistiques/politique/votations/annee-2018/2018-06-10/initiative-monnaie-pleine.assetdetail.5287524.html official results of the vote on the sovereign money initiative].</ref> | part1_percentage3 = 1.8 | part1_color3 = | part1_choice4 = Null<ref group=note name=Blank-null/> | part1_percentage4 = 0.4 | part1_color4 = | part1_caption = | part2_subject = | part2_choice1 = | part2_percentage1 = | part2_color1 = | part2_choice2 = | part2_percentage2 = | part2_color2 = | part2_choice3 = | part2_percentage3 = | part2_color3 = | part2_choice4 = | part2_percentage4 = | part2_color4 = | part2_caption = | website = [https://www.admin.ch/gov/fr/accueil/documentation/votations/20180610/initiative-monnaie-pleine.html Official announcement] }}
The '''Swiss sovereign money initiative''' of June 2018, also known as '''Vollgeld''',<ref group=note>In {{langx|de|link=no|Vollgeld-Initiative}}; in {{langx|fr|link=no|Initiative Monnaie Pleine}}; in {{langx|it|Iniziativa Moneta Intera }}</ref><ref group=note>The official title of the referendum is the ''Swiss federal popular initiative "for crisis-safe money: money creation by the National Bank only! (Sovereign Money Initiative)"''</ref> was a citizens' (popular) initiative in Switzerland intended to give the Swiss National Bank the sole authority to create money.<ref name=admin/>
On 10 June 2018, the initiative was defeated in the vote, with 76% per cent of voters rejecting it.<ref name="FT-june 10 Atkins">{{cite news |last1=Atkins |first1=Ralph |title=Swiss voters reject 'sovereign money' initiative |url=https://www.ft.com/content/686e0342-6c97-11e8-852d-d8b934ff5ffa |access-date=10 June 2018 |work=Financial Times |issue=June 10, 2018}}</ref><ref name=reject>{{cite news |last1=Bosley |first1=Catherine|date=10 June 2018 |title=Swiss Reject Radical Sovereign Money Proposal |newspaper=Bloomberg.com|url=https://www.bloomberg.com/news/articles/2018-06-10/swiss-set-to-reject-sovereign-money-proposal-projection-shows |publisher=Bloomberg |access-date=10 June 2018}}</ref>
==Background and origins==
=== Theoretical foundation === The Sovereign Money Initiative drew theoretical foundations from the "Chicago Plan" developed by University of Chicago economists during the Great Depression.<ref name="reject" /> In March 1933, these economists circulated a memorandum proposing radical changes to the American financial system,<ref name="news">{{cite news |last=Phillips |first=Ronnie J. |date=June 1992 |title=The 'Chicago Plan' and New Deal Banking Reform |publisher=Jerome Levy Economics Institute |ssrn=160989}}</ref> including eliminating fractional-reserve banking and requiring 100% bank reserves on demand deposits. American economist Irving Fisher<ref name="fisher">{{cite journal |last=Fisher |first=Irving |author-link=Irving Fisher |date=April–June 1936 |title=100% Money and the Public Debt |url=http://realmoneyecon.org/lev2/images/pdfs/100percent_money.pdf |journal=Economic Forum |pages=406–420}}</ref> further developed these ideas, advocating for what he called "100% Money."<ref name="nutshell">{{cite news |last=Kuenzi |first=Renat |date=23 April 2018 |title=Sovereign Money initiative in a nutshell |url=https://www.swissinfo.ch/eng/directdemocracy/vote-june-10--2018_sovereign-money-initiative-in-a-nutshell/44061660 |access-date=2 July 2018 |work=Swiss Broadcasting Corporation}}</ref>
These concepts reemerged following the 2008 financial crisis<ref>{{Cite book |last=Weizsäcker |first=Ernst Ulrich von |url=https://www.google.com/books/edition/Come_On/nWA-DwAAQBAJ?hl=en&gbpv=1&dq=%22Chicago+Plan%22+2008&pg=PA155&printsec=frontcover |title=Come On!: Capitalism, Short-termism, Population and the Destruction of the Planet |last2=Wijkman |first2=Anders |date=2017-11-12 |publisher=Springer |isbn=978-1-4939-7419-1 |language=en}}</ref> as economists and activists seeking alternatives to what they considered an inherently unstable banking system.<ref>{{Cite book |last=Muzio |first=Tim Di |url=https://www.google.com/books/edition/An_Anthropology_of_Money/eCAlDwAAQBAJ?hl=en&gbpv=1&dq=Chicago+Plan+eliminate+business+cycle&pg=PA114&printsec=frontcover |title=An Anthropology of Money: A Critical Introduction |last2=Robbins |first2=Richard |date=2017-03-16 |publisher=Taylor & Francis |isbn=978-1-315-45344-6 |language=en}}</ref> Positive Money helped establish the International Movement for Monetary Reform in 2013, and affiliated organizations developed similar initiatives in multiple countries.<ref>{{Cite book |last=Huber |first=Joseph |url=https://www.google.com/books/edition/The_Monetary_Turning_Point/YtSuEAAAQBAJ?hl=en&gbpv=1&dq=%22International+Movement+for+Monetary+Reform%22+-wikipedia&pg=PA89&printsec=frontcover |title=The Monetary Turning Point: From Bank Money to Central Bank Digital Currency (CBDC) |date=2023-02-17 |publisher=Springer Nature |isbn=978-3-031-23957-1 |language=en}}</ref>
=== Initiative development === The Swiss initiative was started by the Monetary Modernisation Association, a non-governmental organization<ref name="wea">{{cite journal |last=Joob |first=Mark |date=June 2014 |title=The Sovereign Money Initiative in Switzerland |journal=World Economics Association Newsletter |volume=4 |issue=3 |pages=6–7}}</ref> founded in 2011. The association began collecting signatures in June 2014, gathering over 110,000 valid signatures,<ref name="Khan">Mehreen Khan, [https://www.telegraph.co.uk/finance/economics/11999966/Switzerland-to-vote-on-banning-banks-from-creating-money.html "Switzerland to vote on banning banks from creating money"], ''The Daily Telegraph'', 24 December 2015</ref> surpassing federal popular initiative requirements. The initiative was formally submitted to the Federal Chancellery in December 2015.<ref name="Rimkus">Rimkus, Ron (5 February 2018) "[http://www.cityam.com/279968/vollged-initiative-and-does-spell-end-fractional-reserve What is the Vollged Initiative? Does it spell the end of fractional reserve banking?]", ''City A.M.''</ref>
The Swiss government scheduled the referendum for 10 June 2018, alongside a separate gambling regulation initiative.<ref name="June2018">"[https://www.admin.ch/gov/fr/accueil/documentation/communiques.msg-id-69654.html Objets de la votation populaire du 10 juin 2018]" ("Objects of the popular vote of 10 June 2018], Federal Chancellery of Switzerland (in French)</ref> The timing allowed nearly five months for extensive public debate.
==The proposal==
=== Core elements === The Sovereign Money Initiative proposed three fundamental changes to the Swiss monetary system:
# A monopoly on money creation: Only the Swiss National Bank would be allowed to create Swiss francs.<ref name="Rimkus" /> # Full-reserve banking: Commercial bank demand deposits would require 100% reserves, ending the current fractional-reserve practice.<ref name="Khan" /> # Separation of payments and lending: Banks would have to clearly distinguish between payments (fully reserved) and lending and investment (not guaranteed).<ref>{{Cite book |last=Burda |first=Michael C. |url=https://www.google.com/books/edition/Macroeconomics/mi7VDgAAQBAJ?hl=en&gbpv=1&dq=Vollgeld+payments&pg=PA238&printsec=frontcover |title=Macroeconomics: A European Text |last2=Wyplosz |first2=Charles |date=2017 |publisher=Oxford University Press |isbn=978-0-19-873751-3 |language=en}}</ref>
=== Proposed mechanisms === Under the initiative, the Swiss National Bank would create new money, distributing it through three channels:<ref>{{Cite book |last=Bieri |first=Sabin |url=https://www.google.com/books/edition/Transitioning_to_Reduced_Inequalities/Vm-6EAAAQBAJ?hl=en&gbpv=1&dq=Vollgeld+dividend&pg=PA78&printsec=frontcover |title=Transitioning to Reduced Inequalities |last2=Bader |first2=Christoph |date=2023-02-09 |publisher=MDPI |isbn=978-3-03921-160-9 |language=en}}</ref>
* Debt-free spending: Directed to the federal government for public projects * Citizens dividends: Payments to all Swiss citizens * Interest-free loans: Lending to commercial banks, extending credit to the economy
Commercial banks would operate as intermediaries between savers and borrowers, no longer creating money through lending. All demand deposits would be fully backed.<ref>{{Cite book |last=Burda |first=Michael C. |url=https://www.google.com/books/edition/Macroeconomics/mi7VDgAAQBAJ?hl=en&gbpv=1&dq=Vollgeld+intermediary&pg=PA575&printsec=frontcover |title=Macroeconomics: A European Text |last2=Wyplosz |first2=Charles |date=2017 |publisher=Oxford University Press |isbn=978-0-19-873751-3 |language=en}}</ref>
=== Constitutional changes === The initiative required amending Article 99 of the Federal Constitution, which currently states the Confederation has exclusive right to issue coins and banknotes.<ref>[https://www.admin.ch/opc/en/classified-compilation/19995395/index.html Federal Constitution of the Swiss Confederation] {{Webarchive|url=https://web.archive.org/web/20160621000507/https://www.admin.ch/opc/en/classified-compilation/19995395/index.html|date=21 June 2016}}, Federal Chancellery of Switzerland (page visited on 13 April 2018).</ref> The amendment would extend this monopoly to electronic deposits which make up 90% of money in circulation.<ref name="Khan" /><ref name="Barghini">Tiziana Barghini, shall [https://www.gfmag.com/magazine/april-2018/swiss-vote-reclaiming-fiat-power "Swiss to vote on reclaiming fiat power"], ''Global Finance'', 5 April 2018</ref>
== Arguments for and against == Proposals for "full-reserve banking", going also by titles such as "debt-free money," have been repeatedly presented to the public and then attacked by both mainstream and heterodox economists who suggest that supporters of such "populist" schemes misunderstand central-bank operations, money creation, and how the banking system works. Russian-born British economist Abba Lerner, in 1943, had advocated that the central bank could start "printing money" to match government deficit-spending "sufficient to achieve and sustain full employment."<ref>"[http://k.web.umkc.edu/keltons/Papers/501/functional%20finance.pdf Functional Finance and the Federal Debt]" by Abba Lerner, 1943, ''Selected Economic Writings of Abba Lerner'', University of Missouri-Kansas City reprint</ref><ref group="note">"Government should adjust its rates of expenditure and taxation such that total spending in the economy is neither more nor less than that which is sufficient to purchase the full employment level of output at current prices. If this means there is a deficit, greater borrowing, “printing money,” etc., then these things in themselves are neither good nor bad, they are simply the means to the desired ends of full employment and price stability." Lerner (1943)</ref>
According to the initiative's supporters,<ref name=wea/> money is created as debt, and comes into existence by debt creation when commercial banks borrow from central banks, and when governments, producers, or consumers borrow from commercial banks. Proponents do not want money creation to be under private control as this constitutes a "subsidy" to the banking sector. They consider money created by the banks to create significantly adverse effects, such as inflation (since "the more money [the banks] issue, the higher their profits"), and amplification of crises (since borrowing occurs pro-cyclically). Furthermore, they claim that bank deposits are not inherently safe.<ref name=wea/>
[[File:CHF coins.jpg|thumb|The coins of the Swiss franc.]] ==Reactions to the proposal== The Swiss National Bank opposed the initiative.<ref name="snb-faq">{{cite web |author=<!--Not stated--> |date=2018-03-05 |title=Swiss sovereign money initiative (Vollgeldinitiative): frequently asked questions |url=https://www.snb.ch/en/mmr/reference/media_dossier_vollgeld_qa/source/media_dossier_vollgeld_qa.en.pdf |access-date=2022-03-20 |publisher=Swiss National Bank}}</ref> The Swiss National Bank chairman, Thomas Jordan, warned that "Acceptance of the initiative would plunge the Swiss economy into a period of extreme uncertainty" because "Switzerland would have an untested financial system that would differ fundamentally from that of any other country".<ref name=snb-faq/><ref>Thomas Jordan, [https://snb.ch/en/mmr/speeches/id/ref_20180116_tjn/source/ref_20180116_tjn.en.pdf "How money is created by the central bank and the banking system"], Swiss National Bank, 16 January 2018</ref> The Deutsche Bundesbank does not support the initiative.<ref>Jan Mallien, [https://global.handelsblatt.com/finance/castrating-the-banks-754341 "Swiss proposal: castrating the banks"], ''Handelsblatt Global'', 25 April 2017 (page visited on 13 April 2018).</ref>
In 2016, ''The Economist'' commented that the Sovereign Money Initiative "system would be safer for depositors" but that "a huge part of the Swiss economy, would be turned inside-out, with unpredictable but probably expensive consequences."<ref>"[https://www.economist.com/news/finance-and-economics/21693614-swiss-government-rejects-nationalisation-money-creation-shake-your-money Shake your money makers]", ''The Economist'', 27 February 2016</ref> ''Global Finance'' described the Sovereign Money Initiative as "challenging the current worldwide norm".<ref name=Barghini/>
In June 2018, ''Financial Times'' associate editor and chief economics commentator Martin Wolf urged his readers to vote in favour of the Swiss initiative, stating that existing bank regulation and bank balance sheets would not be sufficient to prevent a major future crisis.<ref>Martin Wolf: [https://www.ft.com/content/d27b000e-6810-11e8-8cf3-0c230fa67aec ''Why the Swiss should vote for "Vollgeld".''] Financial Times, 6 June 2018. Retrieved 7 June 2018</ref> Economist L. Randall Wray has argued repeatedly on what he sees as the "foolishness" of policy proposals like the Vollgeld initiative.<ref name=policy>"[http://neweconomicperspectives.org/2014/07/debt-free-money-non-sequitur-search-policy.html#more-8381 Debt-Free Money: A Non-Sequitur in Search of a Policy]" by L. Randall Wray, ''New Economic Perspectives'', 1 July 2014</ref><ref name=banana>"[http://neweconomicperspectives.org/2015/12/debt-free-money-banana-republics.html Debt-Free Money and Banana Republics]" by L. Randall Wray, ''New Economic Perspectives'', 19 December 2015</ref> Writer and blogger Tim Worstall believed the initiative itself is ostensibly "driven by ill-informed loons."<ref name=loons>{{cite news |last1= Worstall |first1=Tim |author-link1=Tim Worstall |date=25 December 2015|title=Swiss Monetary Reform Referendum Is, Sadly, Driven By Ill Informed Loons |url=https://www.forbes.com/sites/timworstall/2015/12/25/swiss-monetary-reform-referendum-is-sadly-driven-by-ill-informed-loons/#6314902e63b4 |work=Forbes |access-date=6 July 2018}}</ref>
==Result== On 10 June 2018, the Swiss rejected in a "landslide" of approximately 75% of negative votes the proposal of the sovereign-money project.<ref name=reject/><ref>{{cite news |last1= McDougall |first1=Mary |last2=Riley |first2=Charles |date=10 June 2018|title=Swiss vote down 'dangerous' overhaul of banks |url=https://money.cnn.com/2018/06/10/investing/switzerland-sovereign-money-referendum-rejected/index.html |archive-url=https://web.archive.org/web/20180611014934/http://money.cnn.com/2018/06/10/investing/switzerland-sovereign-money-referendum-rejected/index.html |url-status=dead |archive-date=11 June 2018 |work=Bloomberg |access-date=10 June 2018}}</ref>
==Historical precedents== {{See also|Criticism of fractional-reserve banking}} The objective of the Swiss sovereign money initiative of June 2018 was essentially to "end fractional reserve banking."<ref name=admin/><ref name=June2018/><ref name=Rimkus/> The specific initiative in Switzerland was part of the so-called "International Movement for Monetary Reform," created by the lobbying organisation Positive Money in 2013.<ref name=voters>{{cite news |last=Selby-Green|first=Michael |date=11 June 2018 |title=Swiss voters rejected a radical move to change the way money is created|url=http://www.businessinsider.com/swiss-voters-reject-vollgeld-2018-6 |work=Business Insider |access-date=2 July 2018}}</ref> The idea of requiring banks’ loans to be fully backed by deposits, according to them, has its roots in the Great Depression.<ref name=nervous>{{cite news |last=Bosley |first=Catherine |date=19 February 2018|title=Why Swiss Vollgeld Vote Has the Central Bank Nervous|url=https://www.bloomberg.com/news/articles/2018-02-19/why-swiss-vollgeld-vote-has-the-central-bank-nervous-quicktake |work=Bloomberg |access-date=2 July 2018}}</ref>
The ''Vollgeld'' initiative's monetary reform ideas had already been the subject of a federal legislation proposal in the United States through U.S. Congressman Dennis Kucinich.<ref name="neoliberal">{{cite book |last1=Eckrich|first1=Lucille L.|editor-last1=Hartlep|editor-first1=Nicholas D.|editor-last2=Eckrich |editor-first2=Lucille L.T.|editor-last3=Hensley |editor-first3=Brandon O. |title=The Neoliberal Agenda and the Student Debt Crisis in U.S. Higher Education|publisher=Routledge|date=2017 |chapter=Monetary Transformation and Education |isbn=9781138194656|name-list-style=amp}}</ref>{{rp|233–36}} In 2011, Positive Money<ref>{{cite news |last=Tekelova |first=Mira|date=2 May 2012 |title=NEED Act |url=http://positivemoney.org/2012/05/news-from-usa-need-act/ |work=Positive Money|access-date=2 July 2018}}</ref> and the American Monetary Institute<ref>{{cite news |last=Wolford |first=Ben |date=2013-10-16 |title=Major Historic Progress was made by Congressman Kucinich |url=http://www.monetary.org/american-monetary-need-act |work=American Monetary Institute |access-date=2 July 2018 |archive-url=https://web.archive.org/web/20180614184447/http://www.monetary.org/american-monetary-need-act |archive-date=14 June 2018 |url-status=dead }}</ref> backed Kucinich's attempt to introduce the National Emergency Employment Defense Act, a bill of legislation that would assign the authority for money creation exclusively to the U.S. Treasury,<ref group="note">In the words of the bill: "to restore the authority to create money to a Monetary Authority within the Department of the Treasury"</ref> thus ending fractional banking. The proposal did not make it to the floor.
In 2015, Iceland's Prime Minister Sigmundur Davíð Gunnlaugsson commissioned a study for monetary and banking reform. Frosti Sigurjónsson, economist and MP, published his findings and recommendations the same year,<ref>{{cite news |last=Sigurjónsson|first=Frosti|author-link= Frosti Sigurjónsson|date=March 2015 |title=Monetary Reform - A better monetary system for Iceland|url=https://www.stjornarradid.is/media/forsaetisraduneyti-media/media/Skyrslur/monetary-reform.pdf }}</ref> in which the abolition of fractional banking, among other things, was proposed.<ref name=AFP>Agence France-Presse, [https://www.telegraph.co.uk/finance/economics/11507810/Iceland-looks-at-ending-boom-and-bust-with-radical-money-plan.html "Iceland looks at ending boom and bust with radical money plan"], ''The Daily Telegraph'', 31 March 2015</ref><ref>Svanbjörn, Thoroddsen & Sigurjónsson, Sigurvin B. (2016) [https://assets.kpmg.com/content/dam/kpmg/is/pdf/2016/09/KPMG-MoneyIssuance-2016.pdf. “Money Issuance: Alternative Monetary Systems”]. A report commissioned by the Icelandic Prime Minister’s Office. KPMG, Iceland. 16–17.</ref> Economist Bill Mitchell criticized the Icelandic scheme, on the grounds that, as he stated, even if implemented, "essentially the money supply would still be endogenous," unless the country's central bank would be willing to "tolerate the interest rate going beyond its control" or witness "a lack of funds available for borrowing." Mitchell argued that the cause of the crisis in Iceland was not the "credit-creation capacity of the banks" but other factors, such as "banks speculating in foreign-currency debt & assets"; banks "no longer behaving like banks"; the owners of the specific banks "engaging in devious and self-serving" actions; and "lack of prudential control."<ref>Mitchell, William (May 2015) "[http://bilbo.economicoutlook.net/blog/?p=30827 Iceland’s Sovereign Money Proposal – Part 1]", "[http://bilbo.economicoutlook.net/blog/?p=30833 Part 2]"</ref>
The same year, the “Ons Geld” ("Our Money") organization that supports "sovereign monetary reform" in the Netherlands mounted a citizen's initiative<ref>{{Cite web|url=http://burgerinitiatiefonsgeld.nu/|title=Maak publieke geldschepping bespreekbaar {{!}} burgerinitiatief|website=Burgerinitiatief Geldschepping|language=en|access-date=2019-10-14}}</ref> that resulted in parliamentary debate and the decision to have the government think tank Scientific Council for Government Policy study the proposal to have fractional banking outlawed and “money creation returned to public hands”.<ref name=neoliberal/>
== See also == {{Portal|Money|Politics|Switzerland|Business and economics|Society}} * The Chicago Plan Revisited * Monetary reform * Monetary sovereignty * Money creation * Politics of Switzerland * Swiss gold reserves referendum, 2014
==Notes== {{reflist|group=note|2}}
== References== {{Reflist}} {{Swiss elections}}
{{DEFAULTSORT:Swiss sovereign-money initiative,2018}} Category:2018 referendums sovereign-money initiative Sovereign money Category:Monetary reform Category:Monetary policy Category:Economy of Switzerland Category:June 2018 in Switzerland