ZURICH (Reuters) – Swiss voters will learn on Sunday if their country will be the first in the world to introduce a radical new financial system that would bar commercial banks creating money each time they made a loan.
Polls were due to close around 7.00 a.m. ET in the nationwide referendum on the Sovereign Money initiative, known as Vollgeld or “real money” in German, with a result expected around 11.00 a.m. ET.
The initiative, called under Switzerland’s system of direct democracy after gathering more than 100,000 votes, wants to make the Swiss National Bank (SNB) the only authority in the country authorized to create money in the country.
The plan, if accepted could have repercussions beyond Switzerland’s borders by removing a practice which underpins most of bank lending in the world.
Contrary to common belief, most money in the world is not produced by central banks but is instead created by commercial lenders when they lend beyond the deposits they hold for savers.
Supporters said their plan would make the Swiss financial system more secure and the money in people’s accounts safe from bank runs.
But opponents, including the SNB, Swiss government and the banks, have said the plan was a dangerous experiment which could damage the Swiss economy.
The latest polls showed the initiative unlikely to succeed with 54 percent of respondents opposing the plan and 34 percent in favor.
Reporting by John Revill; Editing by Keith Weir
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