Swiss vote to hold 20% of its reserves in gold shot down by Swiss population

What was the Swiss Gold Initiative?

1. SNB will repatriate and store all Swiss gold reserves in Switzerland.
2. SNB will purchase gold until it makes up 20% of their reserves (currently 7.6%), and it must maintain this level of gold reserves.
3. SNB can no longer sell gold reserves.

Canton wise voting against the Swiss gold initiative

Swiss voters rejected a measure in a referendum requiring their central bank to hold a portion of its assets in gold, a measure its President Thomas Jordan termed an “invitation to speculators” that could have hurt the economy. Bullion tumbled to a three-week low.

The “Save Our Swiss Gold” proposal stipulating the Swiss National Bank hold at least 20 percent of its 520-billion-franc ($538 billion) balance sheet in gold and never sell any bullion was voted down by 77 percent to 23 percent, the government said yesterday. Polls had forecast the initiative’s rejection. Two other initiatives on tax privileges for foreign millionaires and immigration limits also were rejected.

SNB policy makers warned repeatedly that the measure, which also required the 30 percent of central bank gold stored in Canada and the U.K. to be repatriated, would have made it harder to keep prices stable and shield the central bank’s cap on the franc of 1.20 per euro. That minimum exchange rate was set three years ago, with the SNB pledging to buy foreign currency in unlimited amounts to defend it.