Swiss franc to leave gold standard in May

The Swiss government is putting a new currency law into force at the beginning of May. This formally severs the long-standing link between the Swiss franc and the gold standard.

The Swiss government is putting a new currency law into force at the beginning of May. This formally severs the long-standing link between the Swiss franc and the gold standard.

It will permit the national bank to re-evaluate its gold reserves, and allow the envisaged sell-off of half of the country’s 2,600 tonne bullion reserve.

The gold sales will be co-ordinated with the central banks of the European Union, who also want to run down their gold stocks, without upsetting the already low global gold price.

For the time being, proceeds from any gold sales will remain with the national bank. The government has still not agreed on what to do with funds generated by the sales.

The cabinet wants to earmark 500 tonnes of gold for a proposed Solidarity Foundation which will support charitable projects at home and abroad. The gold would be the foundation’s capital, with the projects being financed with the annual interest.

A further 800 tons could be used to finance computer education, to augment the federal old age pension scheme or to offset cantonal deficits.

But agreement is proving hard to find, and the government’s plans have been thrown off course by an initiative by the conservative People’s Party which wants to scrap the Solidarity Foundation and use surplus gold reserves for the pension scheme.

by Peter Haller