Swiss Banker Backs Proposal That Would Alter Lending In The Country

Jean-Marc Decressonniere, a Switzerland banker, is one of few in the industry who plans to support a vote in June that would change the way traditional lenders operate in the country.

According to news from Reuters, Decressonniere is supporting the Sovereign Money initiative, which is calling for commercial banks to stop creating money each time they issue a loan. Backers of the proposal argue that by shaking up the traditional financial system, it can ensure the Swiss National Bank (SNB) is the only one that produces new money in Switzerland, removing fractional reserve banking, which Reuters said is common across the globe. Additionally, only a portion of bank deposits would be backed by central bank notes, coins and bank deposits held at the Swiss National Bank.

Decressonniere, who is the director of the Freie Gemeinschaftsbank, a small bank in Basel, Switzerland, told Reuters that changing the system would make the financial services industry in the country less susceptible to boom-and-bust cycles.

“In [the] future, it would be more sensible to have money administered by a central authority that is independent and looks at the whole economy,” he said. “Commercial banks have a more limited perspective based on their own profit targets.”

According to the report, roughly 90 percent of the money in Switzerland is digitally created by commercial banks, a practice, says supporters of the Sovereign Money initiative, that creates instability. They want to de-risk the system by letting customers keep their money in sovereign money accounts that are risk-free. Banks would then only be able to lend money they oversee in savings accounts or from what they get from the money markets or SNB. The Swiss National Bank is against the initiative. Chairman Thomas Jordan told Reuters he believes such a move would hurt the central bank’s ability to conduct independent monetary policy and subject it to political pressures.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.