Swiss Franc Peg Called Into Question

In recent months the Swiss National Bank (SNB) has been facing growing criticism as a result of its attempts to suppress the value of the Swiss franc. The SNB has been buying euros in an effort to stabilise the euro at the 1.20 Swiss franc mark. Swiss parliamentarians have also started to question the auditing processes for the country’s gold reserves, while some conservative politicians are backing a private initiative promoting the introduction of a new gold franc.
 
Many Swiss are asking why the SNB is trying to prop up the euro. In Q1 alone the bank spent 1.7 billion francs on open market operations, buying the euro whenever it has looked like falling through 1.20. These measures are aimed at protecting the export and tourism sectors. The 2008 financial crisis also forced the SNB to engage in unprecedented money printing in an effort to prop up the country’s banking system. But critics say that this is destroying the country’s sound money reputation and undermining generations’ worth of hard-earned national prosperity.
 
“The Gold Initiative” led by Luzi Stamm's SVP party has also been attracting attention. This initiative is trying to promote greater disclosure about the status of the nation’s gold reserves, and – as with similar campaigns in Germany – is trying to get the SNB to repatriate gold held abroad. The initiative also wants to place strict limits (golden chains if you will) on the SNB’s ability to sell gold. Supporters of this campaign hope to collect at least 100,000 signatures from Swiss citizens in a push for a national referendum on the issue.
 
Another private initiative that is finding support among conservative politicians is calling for a prompt introduction of a new gold franc. This gold franc should function as a parallel currency to the Swiss franc and protect citizens from devaluation and the financial market risks. Yesterday the National Council's Committee for Economic Affairs discussed this issue, and supporters also hope that this idea can be put to a referendum.
 
Gold is slowly moving back into favour among Switzerland’s economic elite.