The Swiss National Bank (SNB) has lifted a long-kept secret: most of its gold reserved are held domestically. A rightwing initiative wants the bank to repatriate all its gold from abroad.
SNB president Thomas Jordan disclosed on Friday that 70 per cent of the 1,040 tons of gold are stored in Switzerland.
Another 20 per cent are with the Bank of England and ten per cent at the Bank of Canada, according to a speech given at the bank’s annual general meeting in the Swiss capital Bern.
Jordan said a number of criteria, including regional diversification and market access, determined the choice of the central bank.
He said the SNB hoped to satisfy demands for greater transparency and put an end to speculation and false ideas circulating in the public.
The SNB’s gold holdings are the target of an initiative by the rightwing Swiss People’s Party, the far-right Swiss Democrats and the Lega dei Ticinesi movement. They demand that at least 20 per cent of the central bank’s assets be in the form of gold. They also want all gold reserves to be kept in Switzerland.
In a rare comment on political issues, Jordan said the initiative would be counterproductive if it were approved by voters. The cabinet has yet to set a date for the ballot.
“These measures would, in certain situations, considerably hinder the SNB in fulfilling its monetary policy mandate and be detrimental to Switzerland,” he said.
The bank’s autonomy must not be compromised by rigid rules on the composition of its balance sheet, he added.
The SNB’s mandate is to maintain price stability, which it defines as positive inflation below two per cent.
However, Jordan didn’t exclude increasing the central bank’s gold holdings at some point.
“As part of a good diversification of currency reserves, a certain proportion of gold can help reduce the balance sheet risk,” he said.
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