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Swiss to vote on central bank's gold

Staff writer |
Swiss voters will decide November 30 on an initiative that would force the country's central bank to more than double its gold holdings.

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The Save Our Swiss Gold initiative would require the Swiss National Bank to hold a fifth of its assets in gold within five years. It would also prohibit the bank from selling any of its gold in the future and require that Swiss gold held overseas be repatriated.

Organizers of the vote, members of the conservative Swiss People's Party, say the new rules are needed because a three-year effort to cap the strength of the Swiss franc has left the SNB holding piles of euros. Those euros, the organizers say, have linked Switzerland to a currency that has been devalued in the wake of the financial crisis.

The SNB says keeping its gold holdings at 20% would handcuff it by forcing it to buy gold every time it buys euros. That could weaken the SNB's ability to intervene in the market, analysts say, and its earnings performance would increasingly be dictated by gold's market price.

The Swiss federal government, both houses of parliament and business lobbies, including Economiesuisse, have recommended voters reject the initiative because it would affect the SNB's policy and, by extension, the economy. A majority of voters and a majority of Switzerland's 26 cantons need to approve the initiative for it to pass.

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