The Swiss Want Bars.. Of Gold Not Chocolate!
By Chirag Mehta
India is a country at stark contrast to Switzerland. We are not talking about the obvious reference to development, or who makes better chocolate, but in terms of how the two nations exhibit democracy.
India is the largest democracy in the world, Switzerland, nowhere near but how vibrant the democracy needs to be seen….
In India, people are discouraged from opting for their preferred investment i.e. Gold by imposing tariffs and restrictions on imports of gold. Whereas at the other extreme is Switzerland where people not only have a right to choose where they can park their saving but also challenge the way the government runs its finances and what should make up the government reserves! Yes, I am talking about the Swiss Gold Initiative where a 100,000 people have signed a petition making way for a referendum on gold related policies, on which people will cast their decisions.
The referendum has arisen through a popular initiative called ‘Save our Swiss Gold.’ In Switzerland, citizens can propose changes to the Swiss constitution through a mechanism called a ‘popular initiative’, even if parliament is against the proposal. The ‘Save our Swiss Gold’ initiative is set to highlight the important issues of sovereign gold reserves and who has possession and controls them. On a broader scale, it may lead to an important debate about each country’s national patrimony and their gold reserves.
On the ballot is a measure to prohibit the country’s central bank, the Swiss National Bank (SNB) from further gold sales, to repatriate gold owned by the government but held in different countries back to Switzerland, and to mandate that gold make up at least 20 percent of the SNB’s assets.
What’s driving the cause?
Switzerland has, for hundreds of years, been a bastion of sound monetary policy and low inflation. But this has gradually changed in the last 100 years since the creation of the Fed in the US and especially during the past 15 years when the Swiss government quietly removed the 40% gold backing from the revised Federal Constitution which was adopted by popular vote in 1999.