Swiss Review 4/2018

10 Swiss Review / July 2018 / No.4 Politics Two proposals about money One concerned sovereign money, the other gambling. One was rejected, the other approved. The Swiss people do not want the National Bank to be solely responsible for creating money. But they approved the new Federal Act on Gambling. JÜRG MÜLLER The debate all over the country and in the media was certainly interesting, but it was also very taxing. Many peo- ple would have gained a better under- standing of howourmonetary system works. However, the economic and monetary policy arguments failed to persuade the majority to switch to a sovereign money system. The sover- eignmoney initiative was rejected on 10 June by 75.7% of the electorate and every canton. The initiative’s authors wanted to make the National Bank solely responsible for issuing not just banknotes and coins –whichmake up the smallest proportion of money – but all forms of money. Today, elec- tronicmoney and bookmoney are cre- ated by commercial banks through the issuing of credit. The group behind the initiativewanted to prevent them from doing so in future. They argued that sovereignmoney would provide amore secure financial system. Sovereignmoneywould have been withdrawn from the lending cy- cle. The banks would no longer have had customer deposits on their bal- ance sheets andwould only have been allowed to manage them. This would have been “real money” and not part of bankruptcy assets in the event of a banking crisis. Loans could only have been issued with money specially made available by savers, other banks and the National Bank. Opponents contended that this was a dangerous experiment for the Swiss financial centre, was unprece- dented worldwide and would have incalculable consequences. The crea- tion of money by the banks is already limited by tightened regulations and provisions on equity capital andmin- imum reserves, while customer de- posits are also protected up to 100,000 Swiss francs. The Federal Council, Parliament, industry, the banks and all the major political par- ties rejected the popular initiative. The initiative’s authors, various econ- omists and political activists, lacked prominent figureheads and were po- litically hard to pin down. Some left- wing politicians showed a degree of sympathy for the issue. But even SP National Councillor and economics expert Susanne Leutenegger Oberhol- zer welcomed the outcome as she be- lieved the sovereign money initiative would have been the wrong solution to a genuine issue – the need to make the financial systemmore secure. Foreign online casinos blocked The debate on the new Gambling Act took on an incredible dynamic. The law’s central point was the legalisa- tion of online casino games – though only Swiss operators would receive li- cences, whereas those abroad would be blocked. Youth parties from right across the political spectrum called the referendum against the bill and started an intense debate about the fundamental principle of blocking content on the internet. The youth parties were supported by the FDP, the Greens, the Green Liberals and the BDP, who also joined the no cam- paign. Those opposed to the law argued that it was tantamount to internet censorship. They warned of the dan- gers of blocking in other areas. Swit- zerland would obstruct the path to the digital future. Supporters as- serted that this was a special case that would not set a precedent for further online restrictions. It was a matter of allowing old-age and survivors’ in- surance, cultural societies and sports clubs to continue benefiting from ca- sino gambling. Opening it up to non- Swiss operators on the internet would have seen some of the money go abroad. Most of the electorate were clearly won over by these arguments. Many people also took exception to the fact that the referendumwas sup- ported by a 500,000 Swiss franc con- tribution from foreign gambling op- erators. Voting results from 10 June 2018 24.0 % Yes 72.9 % Yes 75.7 % No 27.1 % No Sovereign Money Initiative Federal Act on Gambling