Almost 500,000 Swiss citizens voted for a financial system based on Bitcoin. While the referendum was not enough to bring about change, around 24 percent of all votes were cast in favour of the transformation of the Swiss economic system.
To make the financial system more robust, the Sovereign Money Initiative – or the full money initiative – would have prevented banks from “creating” money electronically out of nothing, so to speak, if they did not have appropriate cash reserves.
Minimum reserve banking has been heavily criticised over the years – the late Milton Friedman even suspected that the system was partly responsible for the global economic crisis. The Swiss banking sector is of a different opinion. The Chairman of the Swiss National Bank, Professor Thomas Jordan, declared himself against the Sovereign Money Initiative:
“THE FULL MONEY SYSTEM CANNOT PREVENT FINANCIAL BUBBLES, AS THESE ARE PRIMARILY DUE TO MISJUDGEMENTS BY INVESTORS.”
Is Bitcoin the answer?
As a direct challenge for the debt-based systems of the traditional financial economy, crypto currencies such as Bitcoin offer a mature solution, as well as a fixed, cryptographically secured supply. Of course, Bitcoin cannot function as an alternative in its current form, but future technical improvements in terms of scalability could promote further acceptability.
So far, the international banking industry has not been convinced of this. Although the Swiss Bankers Association did not take an officially defined position on crypto currencies, it reacted to the full money initiative and claimed that its current systems were superior. The association found that
The Swiss Bankers Association firmly rejects the full money initiative. The existing monetary and financial system offers undeniable advantages and has been proven to work very well in the service of the population and the economy. Commercial banks have always provided the Swiss economy with reliable loans, even at the height of the financial crisis.
Unlike banks, crypto currencies can be checked. In 2017, for example, Tether was summoned by the US regulatory authorities after questions arose about the actual coverage. While tether must be legally hedged by the USD currency held, it appears that such regulations are not applicable to banks.