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Massive defeat for ‘sovereign money’ initiative

A tied up package with money wrapping
Voters delivered banks a present by rejecting the sovereign money initiative. Ex-press

Voters refused to buy the 'sovereign money' initiative by an overwhelming margin. More than three quarters of votes went against a radical overhaul of the Swiss financial system.

The initiative called on the central bank to take total control of money supply, which would have imposed much tighter controls on commercial bank lending.

The margin of defeat was much higher than opinion polls had earlier predicted. These had suggested that a third of voters would support the plan, but this was highly optimistic. Only 34% of voters turned out on Sunday, showing a general lack of interest in the main votes.

Swiss Finance Minister Ueli Maurer said voters had rejected risk to the financial system. He told reporters that despite several measures already taken to reduce volatility from the banking sector, the authorities would remain vigilant.

The Swiss Business Federation economiesuisse hailed the rejection of a “risky experiment”. “This may also be interpreted as a sign of confidence in the National Bank’s independent monetary policy,” read a statement from the business lobby group.

The initiative had called for all credit issued by commercial banks to be backed with real money created by the Swiss National Bank (SNB). The central bank would issue loans to commercial banks to underpin the credit they extend to individuals and businesses. 


Only a portion of commercial bank lending is backed by actual money. The rest of the loan exists on paper, creating a large pool of non-central bank issued ‘money’ – around 90% of the total supply in Switzerland, according to the sovereign money camp. 

Proponents of the initiative feared another financial crisis if too many debtors default, as happened in 2008. Forcing commercial banks to cover every franc of credit they generate would make them think twice about issuing too much. This in turn would protect the economy against boom and bust cycles, bank collapses and customer deposits being burned, the argument ran.

Sovereign money initiative:

24.3% yes                75.7% no 

Reform of gambling law:

72.9% yes                27.1% no

Turnout: 33.8%

Arguments against

The proposal had been rejected by the Swiss government, the SNB and a number of influential banking and economic associations – in short, the establishment. Critics said it would strip away an important revenue stream for commercial banks, making them less likely to give credit in future. 

They also said the initiative failed to give proper recognition to a number of measures already taken to make banks safer.

The SNB said the sovereign money system would be unwieldy to implement, could bring into question its political independence and deflect the central bank from its mandate of achieving price stability.

Lingering scepticism

Despite failing, the initiative signifies a lingering resentment towards bankers following the financial crisis a decade ago, says Martin Brown, a professor of banking at the University of St Gallen.

“This shows that people are still very sceptical about banks,” he told “They have the general impression that banks are just in it for the money rather than providing a valuable service to society.”

Brown believes the sovereign money initiative was a misplaced outlet for dissatisfaction with the banking system because it misses the real cause of the financial crisis – the fact that banks stopped lending to one another. But the vote has at least it has brought such discontent out into the open, he says.

“Even if we solve the problem of banking stability, the issue of negative public opinion towards the sector still needs to be addressed,” he said. “The industry needs to concentrate harder on trust building measures in order to convince the population.”

But Swiss Bankers Association chairman Herbert Scheidt said the result of the vote showed a different story. “The rejection of the sovereign money initiative reflects the confidence of the electorate in the Swiss financial centre and the banks,” he said in a statement. 

The vote shows that people are not willing to put the “existing, stable and high-performing economic and monetary system” at risk “by subjecting it to a reckless experiment”, he added.


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SWI - a branch of Swiss Broadcasting Corporation SRG SSR

SWI - a branch of Swiss Broadcasting Corporation SRG SSR