Nov. 27 (Bloomberg) -- The initiative requiring the Swiss National Bank to hold a fixed portion of its assets in gold makes no sense, according to Citigroup Inc., which said the metal was the equivalent of the virtual currency bitcoin.

“There is no economic or financial case for a central bank to hold any single commodity, even if this commodity had intrinsic value,” Willem Buiter, the bank’s chief economist and a former Bank of England policy maker, wrote in a report dated yesterday. “Forbidding a central bank from ever selling any gold it owns reduces the value of those gold holdings to zero.”

In a move that SNB President Thomas Jordan calls “dangerous,” Switzerland holds a national referendum on Nov. 30 that would require the central bank to hold at least 20 percent of its assets from 8 percent in gold, all of which have to be stored in the country, and never sell any. A plurality of voters oppose the “Save Our Swiss Gold” measure, though a portion of them were still undecided, polls last week showed.

Proponents of the initiative, which would also require repatriation of SNB bullion held in Canada and the U.K., say it would preserve national wealth, while the government and the central bank oppose it as they say it would hinder monetary policy. The central bank would have to buy at least 1,733 metric tons of gold, compared with annual production of about 2,500 tons, to meet the threshold by 2019, Citigroup said.

Like bitcoin, gold has no intrinsic value and is costly to produce and store, Buiter wrote. “If the central bank is to invest in commodities, better to have a balanced portfolio of commodities or, more conveniently, a balanced portfolio of commodity ETFs or other derivatives,” he said.

To contact the reporter on this story: Glenys Sim in Singapore at To contact the editors responsible for this story: James Poole at

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