Fractional Reserve Banking – An Interview With Claudio Grass

The Swiss “Vollgeld” Initiative Revisited

Bloomberg has numerous offices around the world, many of which appear to have quite an independent streak, at least that is our impression. Readers who occasionally watch clips from Bloomberg’s Asia Edition are probably aware of this. One can often see in-depth interviews there with people who espouse views far from the mainstream and who are highly critical of governments and central banking, such as e.g. Dr. Marc Faber or Jim Rogers, to name two prominent ones.

Logo of the Swiss “Vollgeld Initiative”– the text reads: “for crisis-proof money: money creation solely through the central bank!”. The supporters of the initiative naively believe that the “profits” such a system would allegedly produce would be to “the sole benefit of citizens”. This naïve statolatry is as amusing as it is pitiable.

What must be stressed here is the “in depth” qualification – there is a big difference between e.g. CNBC offering 60 seconds of sound bites from Dr. Faber and a 20 minute interview with presenters who are themselves willing to engage in a bit of critical thinking. We are mentioning this by way of introduction, because Kuzman Iliev and Vladimir Sirkarov of Bloomberg TV in Bulgaria seem to be part of this somewhat more off-the-beaten-path tradition as well.

Recently they have done an interview with our friend Claudio Grass, the CEO of Global Gold in Switzerland on the topic of fractional reserve banking. Readers probably remember that there will soon be a referendum on fractional reserve banking in Switzerland, as the so-called “Vollgeld Initiative” (roughly translatable as “Fully Backed Money Initiative”) has garnered the required number of signatures.

The interesting thing about this initiative is that it is actually not led by free market supporters. On the contrary, the proposal comes from a bunch of socialists in close orbit around Karl Marx. It is therefore not surprising that the Swiss National Bank is far less opposed to the idea than it was to the gold initiative. The latter was painted in the starkest colors and said to be practically opening the doors to Hell, as it would actually have limited the SNB’s interventionist powers somewhat (even if not really by as much as it made out).