US News and World Report quotes Global Business and Economics Program Director Andrea Montanino on the recent referendum in Switzerland to return to a “gold standard”:

The design of the gold referendum is also more insidious than it may appear at first glance. As Andrea Montanino, the director of the Global Business and Economics Program at the Atlantic Council and a former executive director of the International Monetary Fund, explains, the two parts of the referendum – requiring the Swiss National Bank to hold a certain percentage of its assets in gold and preventing it from ever selling that gold – would make for a mess as the bank sought to shrink its balance sheet in the future. Since the bank would be forced to sell other assets while holding on to its gold, Montanino points out, over time, gold would become a bigger and bigger proportion of its holdings.

“The risk is that you end up with a central bank where the main asset, probably the only asset, is gold, and you cannot sell it,” Montanino says. If that occurred, he says, “you can’t manage monetary policy. The combination of the two things – the 20 percent and not being allowed to sell gold – is very dangerous.” It’s therefore no surprise that the Swiss National Bank and the major Swiss political parties are actively opposing the referendum.


Even in defeat, the referendum’s mere existence could affect the course of Swiss economic policy. “Even if ‘no’ wins, I think [the central bank] will scale up the gold in their reserves, at least a little bit,” Montanino says, as a way to placate the portion of the population that was for the referendum.

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