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As in Germany and Austria, cash remains essential in Switzerland, although its share of transactions has fallen. However, Swiss citizens will soon have the opportunity to vote on whether to keep banknotes and coins in circulation permanently.
A Swiss pressure group called the Swiss Freedom Movement announced that it had received enough signatures – 111 000 – to hold a referendum. The vote is now on whether to keep cash in Swiss society for future generations. The government must ensure enough banknotes and coins are always available if it goes through. In addition, the bill also requires a vote on whether the government wants to replace the Swiss franc with another currency. This is possibly a reference to the central bank’s digital currency, writes Naked Capitalism.
A pressure group said that Swiss citizens would get a chance to ensure their economy will never be cashless. The new government will not be able to tell if it wants to see a national currency go bankless, a group urging a referendum on the issue says.
The Swiss Freedom Movement says cash is playing a diminishing role in many economies as societies become increasingly digitalized and rely mainly on transfers. This makes it easier for the state to track the movement of citizens’ money.
The draft bill seeks to add a clause to the Swiss Currency Act stating that the central bank and the government must ensure a sufficient supply of banknotes and coins in the money supply and that they must remain in circulation at all times.
Under Switzerland’s system of direct democracy, the bill will be formalized into law if a vote approves it. However, it is up to the government and parliament to decide how the law is implemented.
The Swiss Freedom Movement says that cash plays an increasingly minor role in societies as digital payment options become more widespread. This will make it easier for the state and the central bank to spend citizens’ money and monitor their payment behavior.
“It is clear that the cashless divestment is not just about issues of transparency, simplicity, or security. It also carries a very high risk of totalitarian tracking,” said Richard Koller, president of the FBS, on the organization’s website.
Cash is vital in Switzerland, like Germany and Austria, but its economic role has declined recently. A survey of people’s spending habits by the Swiss Central Bank in autumn 2020 showed that 97% of Swiss citizens keep cash in their wallets for everyday spending. This is significantly higher than in many other countries.
Forty percent of all transactions are carried out in cash in the country, which is higher than in larger European countries. In the UK, the figure is around 15 percent; in Sweden, less than 10 percent and in Norway, 3-4 percent.
“The survey results show that, if we look at the number of payments, cash continues to be the most popular way for the Swiss to pay,” said Fritz Zurbrugge, Executive Vice President of the Swiss Central Bank at the time. “Compared to 2017, when the first survey of this kind was carried out, there has been a significant decrease in its use. The coronavirus pandemic has further boosted the increase in the share of cashless payments.”
As readers know, the pandemic accelerated processes already underway, mainly due to people’s misconception that cash could accelerate the spread of the coronavirus. These fears were amplified by the mainstream media and certain retailers (in the UK, for example, supermarket chain Tesco). The retailers used this as an excuse for consumers to avoid cash payments.
The date of the cash referendum in Switzerland has yet to be determined. According to a Swiss Info video report, none of Switzerland’s major political parties support the popular initiative. The FBS is a libertarian organization, according to the report, and the cash-related people’s initiative is similar to the Vollgeld initiative, which called for the abolition of fractional reserve banking in June 2018.
The Swiss Central Bank opposed this referendum. It is not yet clear what the central bank’s position is on the fresh popular initiative. Officially, the central bank does not care whether people use cash or digital payment alternatives. The most important thing is that people have freedom of choice. Last November, Martin Schlegel, Deputy Governor of the Swiss Central Bank, gave a speech in which he spoke about the three main advantages of cash.
Schlegel stated that for people to enjoy these benefits, the Swiss Central Bank must maintain the Swiss cash infrastructure. Cash handlers (such as ATM operators) and commercial banks are included. It is also necessary to ensure that shops continue to accept banknotes and coins.
It must be acknowledged that the Swiss referendum result will not automatically become law. One reader remarked that there are numerous examples of the Swiss government, parliament, courts, or public institutions delaying or failing to draft unfavorable legislation.