speech embargo 3 may 2018, 6 pm why sovereign money would hurt switzerland swiss institute of banking and finance at the university of st. gallen ( s / bf - hsg ) thomas j. jordan chairman of the governing board ∗ swiss national bank zurich, 3 may 2018 © swiss national bank, zurich, 2018 ( speech given in german ) ∗ the speaker would like to thank petra gerlach for her support in preparing this speech. he also thanks claudia aebersold szalay, simone auer, peter kuster, carlos lenz and alexander perruchoud as well as snb language services. page 1 / 8 ladies and gentlemen today, the swiss institute of banking and finance at the university of st. gallen celebrates its 50th anniversary. let me extend my sincere congratulations on reaching this milestone. our financial system has evolved steadily over the past five decades. in the early years of the institute, the world was still dominated by bretton woods, the post - war monetary system with its fixed exchange rates and the us dollar as anchor currency. thereafter, flexible exchange rates were the order of the day, and more recently, banks have had to face the challenges of the financial crisis. i would like to take this opportunity today to address a topic which has also arisen from the challenges of the financial crisis – the swiss sovereign money initiative. this initiative raises unrealistic expectations, and adoption by the people and the cantons on 10 june 2018 would have serious consequences for switzerland. a sovereign money system would hurt our country as a whole and also make it difficult for the swiss national bank ( snb ) to fulfil its mandate. the snb, like the federal council and parliament, therefore firmly opposes the initiative. but what is the aim of the initiative? according to its authors, the goals are ‘ crisis - safe money ’ and a reduction in the burden on taxpayers. to achieve these, they propose that customers ’ sight deposits at commercial banks be converted into so - called sovereign money accounts, and that ‘ debt - free ’ payments be made by the snb to the state or the people. furthermore, the initiative ’ s authors want to separate the creation of money from the granting of loans because they regard money creation by commercial banks as the main cause of financial crises. sovereign money makes lending more complicated the swiss sovereign money initiative testifies to a deep mistrust of our monetary system in general, and of the current credit system in particular. yet, credit

jean - pierre roth : switzerland - a financial centre in the heart of the euro area summary of a speech by mr jean - pierre roth, chairman of the governing board of the swiss national bank, at the belgian financial forum, brussels, 16 february 2004. the complete speech can be found in french on the swiss national bank ’ s website ( www. snb. ch ). * * * switzerland is not a fortress. in relation to the rest of europe in particular, it is an economy that is very much open to mutual exchanges - notably with regard to trade and finance. it is not by chance that switzerland has become a major financial centre. this can be ascribed to a number of positive factors, including specialist knowledge, a long - established banking tradition, the quality of the financial infrastructure, and customers ’ confidence in the soundness of the country ’ s financial institutions. switzerland ’ s political stability, its high level of savings and the international standing of the swiss franc have also enhanced the appeal of its financial system. increasingly, however, switzerland is not alone in offering such advantages. moreover, the swiss financial centre - like all the others - has to face the challenges of globalisation and the fight against financial crime. as banking secrecy does not afford any protection to funds of dubious origin, the swiss authorities are able to combat money - laundering with a reasonable degree of efficacy. in this area, switzerland has implemented measures that have received international recognition. the introduction of the euro has profoundly changed the environment in which the swiss economy operates. since 1999, the swiss franc has coexisted quite harmoniously with the euro. in fact, the franc has been more stable against the euro than it was against the d mark. this is good news for swiss companies exporting to the european market. on the other hand, such companies have to contend with a greater concentration of foreign - exchange risks. they are responding to this challenge with hedging policies that are more active than those pursued in the past. pegging the franc to the euro in order to eliminate exchange - rate risks would entail more problems than advantages, as it would inevitably push up the level of interest rates in switzerland. against this backdrop, the national bank is continuing to pursue an independent monetary policy that takes account not only of economic trends and inflation forecasts but also of the situation on the foreign exchange markets.