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Switzerland Runs Referendum for Bitcoin-Like Financial System đ¨ This article is 7 years old...
News ⸠Switzerland ⸠Bitcoin ⸠Regulation
Switzerland Runs Referendum for Bitcoin-Like Financial System
2 min read
Updated: Nov. 25, 2019 at 4:24 am UTC
Photo by Dino Reichmuth on Unsplash
Almost 500,000 Swiss citizens voted in favor of a financial system based on the fundamentals of Bitcoin.
While the referendum was not enough to bring change, the radical campaign won about 25% of all votes in favor of overturning Switzerlandâs economic system.
Intended to make the financial system more robust, the Sovereign Money Initiative â or Vollgeldsystem â would’ve barred banks from âcreatingâ money electronically when lending beyond their cash reserves.
Known as âfractional reserveâ banking, this process characterizes how banks may alter a nationâs circulating supply, as per a central bank. While common worldwide, fractional reserve banking has been heavily criticized over the years â the late Milton Friedman even suggested the system was partially responsible for the Great Depression.
Switzerlandâs banking industry begs to differ. Opposing the Sovereign Money Initiative, Swiss National Bankâs President Professor Thomas Jordan stated:
“The Vollgeldsystem cannot prevent financial bubbles, because these are based primarily on misjudgments of investors.”
Bitcoin: The Answer?
Classically, fractional reserve and similar schemes prompted the inception of Bitcoin â whose creator embedded the networkâs genesis block with a pointed message â âThe Times 03/Jan/2009 Chancellor on brink of a second bailout for banksâ.
Emerging as a direct challenge to the debt-based systems of traditional finance, cryptocurrencies like Bitcoin offers an engineered solution â a fixed circulating supply secured by cryptography.
Although, such answers may not have won over the banking industry. JP Morganâs CEO Jamie Dimon, has been a vocal critic of Bitcoin â describing it as a âfraudâ and âworse than the Tulip Market Bubbleâ.
While the Swiss Bankers Association has no defined position on cryptocurrencies, it responded to the initiative â claiming its current systems are superior. The association noted:
The Swiss Bankers Association resolutely rejects the full-money initiative. The existing monetary and financial system offers undeniable benefits and has been shown to work very well in serving the people and the economy.
Cryptocurrencies may face scrutiny where banks are exempted. Tether, for instance, was subpoenaed by US regulators in 2017 after questions were raised over its financial reserves. While its USDT stablecoin must legally be backed by USD currency held in reserve, it appears that such regulations aren’t applicable to banks.
