ZURICH: As Switzerland prepares to vote this month on whether to force the country's central bank to increase its gold reserves, economists warn a 'Yes' vote could wreak havoc in financial markets.
The initiative "Save Switzerland's gold", which will be put to a popular referendum vote on November 30, would oblige the Swiss National Bank (SNB) to boost its gold reserves to at least 20 percent of its holdings, nearly three times more than the current level of seven percent.
It would also require the bank to stop selling its gold and repatriate reserves held in Canada and Britain to ensure that all of its holdings of the precious metal are stored within Switzerland.
"A majority of the Swiss don't even realise that part of 'the people's fortune in gold' is stored abroad and that SNB has already sold off more than half of its gold reserves," warns the committee behind the initiative, made up of members of the populist right-wing Swiss People's Party (SVP).
Posters showing a smiling piggy bank painted red with a white cross like the Swiss flag have been plastered across the wealthy Alpine nation urging voters to "protect the people's wealth" by voting "Yes".
But the initiative has been flatly rejected by the Swiss government, all the large political parties, even including its initiator SVP whose members are divided on the issue.
Industry organisations have also warned that the move would tie the central bank's hands and damage its credibility.
Financial markets are wary of the consequences if the initiative passes in a country that already counts the world's highest gold reserves per inhabitant.
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