“Die Vollgeld-Initiative und eine Alternative (The Swiss Sovereign Money Initiative, and an Alternative),” SNB, 2017

In: Thomas Moser, Carlos Lenz, Marcel Savioz and Dirk Niepelt, editorial committee, Monetary Economic Issues Today, Festschrift in Honour of Ernst Baltensperger, Swiss National Bank/Orell Füssli, Zürich, June 2017. PDF of draft. The sovereign money initiative (Vollgeldinitiative) seeks to gain greater control over the money and credit supply, to increase financial stability and to achieve […]

“Vollgeld, the Blockchain, and the Future of the Monetary System”

Presentation at the Liechtenstein Institute about the Vollgeld initiative, the blockchain revolution, and their possible effects on banks and the monetary system. Report in Liechtensteiner Vaterland, February 1, 2017. HTML. Interview in Wirtschaft Regional, February 4, 2017. PDF.

“Kosten eines Vollgeld-Systems sind hoch (Costly Sovereign Money),” Die Volkswirtschaft, 2016

Die Volkswirtschaft 1–2 2017, December 21, 2016. HTML, PDF. Banning inside money creation would be unnecessary, insufficient, not enforceable, and besides the point. The way forward is to grant everyone access to central bank reserves and let investors choose between reserves and deposits.

Swiss Government Recommends Rejection of “Vollgeldinitiative”

The Swiss Federal Council requests that Parliament recommend to the people and the cantons rejection of the popular initiative “For crisis-resistant money: end fractional-reserve banking (Vollgeld initiative)”, without a counterproposal. The Federal Council doubts that ending fractional-reserve banking would strengthen financial stability. It sees major risks for the Swiss National Bank’s credibility and for financial […]

“Elektronisches Notenbankgeld ja, Vollgeld nein (Reserves for All, But no Sovereign Money),” NZZ, 2016

Neue Zürcher Zeitung, June 16, 2016. PDF, HTML. Ökonomenstimme, June 17, 2016. HTML. Vollgeld seems attractive because it decouples the supply of money from intermediation. By enabling everyone to use legal tender for electronic payments, electronic base money would satisfy a need. Vollgeld would prevent bank runs, at least partly; render deposit insurance unnecessary and reduce moral hazard; could help […]

Switzerland will Vote on “Vollgeld”

A group of Swiss citizens lobbying for monetary reform has succeeded: after collecting more than 100,000 signatures a referendum will have to be held in the next years. In the ballot, Swiss citizens will vote on no more or less than the future of the monetary system in Switzerland. According to the group’s proposal inside-money creation by banks will eventually […]

The Swiss “Vollgeldinitiative”

On June 3, 2014 the Swiss group “Monetäre Modernisierung” (monetary modernisation) started to collect signatures with the aim to force a national referendum on changes to the Swiss constitution. (The group needs to collect 100,000 signatures within an 18 month period in order to succeed.) The referendum would put the “Vollgeldinitiative” (sovereign money initiative) to vote, an initiative that seeks to […]

“Vollgeld, Liquidität und Stabilität (100% Money, Liquidity and Stability),” NZZ, 2014

Neue Zürcher Zeitung, May 12, 2014. PDF. Extended version in Ökonomenstimme, May 13, 2014. HTML. A 100% money regime reduces the risk of credit bubbles, but requires more and better fine-tuning by the central bank. Central banks can already implement higher reserve requirements. If the fact that they don’t reflects policy failure, then the 100% money […]

On 100%-Equity Financed Banks

On his blog, John Cochrane argues that banks could, and should be 100% equity financed. His points are: (1) There are plenty of safe assets—government debt—out there and banks do not need to “create” additional safe assets—deposits. I share this view partly. First, I don’t know what amount of safe assets are sufficient from a […]

“Kunden sollten zwischen Sichtguthaben und elektronischem Notenbankgeld wählen können (Let People Choose Between Deposits and Reserves),” NZZ, 2017

NZZ, August 17, 2017. HTML, PDF. Longer version published in Ökonomenstimme, August 21, 2017. HTML. The Vollgeld initiative may point to a problem but it does not propose a viable solution. Even with Vollgeld, the time consistency friction with its Too-Big-To-Fail implication would persist. A more flexible, liberal approach appears more promising. It would give […]

Fintech Regulation in Switzerland: Open Questions

In the NZZ, Jürg Müller reports about the developing regulatory framework for fintechs in Switzerland. A proposal by the federal finance department drew—reasonable—criticism by various lobbies and industry associations, including the CFA Society Switzerland. Die CFA Society Switzerland will das systemrelevante Bankensystem von anderen Finanzdienstleistern trennen. Dafür sei eine präzisere Bankendefinition nötig, als sie heute […]

How Does the Blockchain Transform Central Banking?

The blockchain technology opens up new possibilities for financial market participants. It allows to get rid of middle men and thus, to save cost, speed up clearing and settlement (possibly lowering capital requirements), protect privacy, avoid operational risks and improve the bargaining position of customers. Internet based technologies have rendered it cheap to collect information […]

Reserves For Everyone

On a new website, Aleksander Berentsen rejects the Swiss Vollgeld initiative. As an alternative, he suggests the Swiss National Bank should offer transaction accounts for everybody, in line with proposals I have made earlier (see here (2016), here (2015), here (2015)). In the Handelszeitung (here and here), Simon Schmid reports.

Swiss Government Dismisses Chicago Plan

The Federal Council dismisses the popular initiative to implement a Vollgeld regime—the “Swiss Chicago plan.” The Council argues that the proposal to abolish inside money creation runs counter to the government’s financial stability strategy and might undermine credit creation as well as trust in the Swiss Franc. The Economist reports as well: As the central bank […]

Binswanger’s “Money Out of Nothing”

In his recent book Geld aus dem Nichts (Money out of Nothing), Mathias Binswanger discusses the role of banks in creating money, and money’s role in affecting the macro economy. The book is written for a non specialist audience and the arguments are often quite loose. In the first part of the book, Binswanger describes how money […]

Sovereign Money in Iceland?

Iceland is considering fundamental monetary reform. A report (PDF) by Frosti Sigurjónsson, Member of Parliament, discusses problems under the current fractional reserve system as well as possible alternatives. The report was commissioned by the prime minister (website of the Prime Minister’s office). The report argues that the Central Bank of Iceland lost control over the money supply. Commercial banks lent pro-cyclically; they effectively forced the Central […]