The Sovereign Money initiative that Switzerland ultimately rejected would have barred commercial banks from electronically creating money when they make loans, and made the Swiss National Bank the only body authorized to create money in the country. While the initiative failed, a full quarter of Swiss voters supported it, which shows a growing interest in a radical overhaul of the monetary system.
Positive Money’s Fran Boait writes in the Independent, the initiative would have “opened up the way for a transformation of the money and banking system the world over. ...
“Unknown to most of the population, 90 per cent of Switzerland’s money is created by private banks ‘out of thin air’ when they lend. …
“Switzerland’s Vollgeld referendum raises a crucial question that has been ignored since the last crisis - should private or public interests be in control of creating almost all the money a country uses?”
“Contrary to common belief, most money in the world is not produced by central banks but is instead created electronically by commercial lenders when they lend beyond the deposits they hold for savers. This arrangement, underpinned by the belief that most debts will be repaid, has been a cornerstone of the global capitalist system …”
“‘The discussion is only just getting started,' said campaign spokesman Raffael Wuethrich. 'Our goal is that money should be in the service of the people and not the other way around and we will continue to work on it.’”
Fran Boait continues:
“You could be forgiven for not knowing [banks create 90 percent of our money ‘out of thin air’] as it is something not even most MPs are aware of. It wasn't confirmed by the Bank of England until 2014, and even in Switzerland various bankers have said that they weren’t aware they were creating money until the Vollgeld Initiative brought it to their attention!
“Under the current regime, our money is essentially privatised, in the hands of commercial banks who are able to create as much of it as the rest of us are willing to borrow and pay rent on. The Vollgeld Initiative would see this replaced with a Sovereign Money system, in which the power to create money is entrusted solely to the central bank - a public institution whose mandate is decided by a democratic government.”
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