By Andrew Morse
ZURICH--The head of the Swiss National Bank reiterated concerns
that a popular vote on requiring the central bank to keep a fifth
of its assets in gold would hinder its ability to conduct monetary
policy.
In text of a speech to be delivered Sunday, SNB Chairman Thomas
Jordan said the initiative, known as "Save Our Swiss Gold," would
limit the central bank's "room for maneuver." That would make it
harder for the bank to intervene during crises and fulfill its
mandate of price stability.
"The initiative is both unnecessary and dangerous," Mr. Jordan
said in the speech. "It is unnecessary because, under the current
monetary order, there is no link between price stability and the
share of gold in the SNB balance sheet."
On Nov. 30, Switzerland will vote on whether the SNB should be
required to maintain a minimum of 20% of its assets in gold. If
passed, the initiative would also prevent the SNB from selling gold
and force it to repatriate its holdings of the precious metal
maintained in the U.K. and Canada.
Analysts and traders believe the initiative could challenge the
SNB's commitment to a three-year-old cap of 1.20 Swiss francs per
euro. Such speculation has already pushed the franc to its highest
level in more than two years. Gold prices have also been affected
by the prospects of the vote; last week gold fell more than 1.5%
after a poll showed Swiss voters were unlikely to approve the
measure.
The organizers of the initiative, members of the right-wing
Swiss People's Party, say the measures are needed because the SNB's
policy of capping the value of the franc has left its balance sheet
stuffed with euros. Those euros, they say, have been devalued in
the wake of the financial crisis.
In the speech, Mr. Jordan said Switzerland's stock of gold is
high compared with the rest of the world and that the SNB has no
plans to sell or purchase gold.
Write to Andrew Morse at andrew.morse@wsj.com
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