Wealth through Investing

The Vollgeld Initiative: A Primer


Over 100,000 Swiss citizens signed a petition to hold a constitutional referendum to end fractional reserve banking. Yes, really! That petition was certified on 24 December 2015 and a vote will be held sometime Sunday, 10 June 2018.

Switzerland, that scion of banking, may vote to end the bedrock philosophy underlying modern finance.

The movement is known as Vollgeld and is inspired by the torch-lighting work of Nobel Prize-winning economist Irving Fisher in the 1930s and the torch-bearing work of the International Monetary Fund (IMF). Though it draws on these antecedents, the Vollgeld Initiative features its own distinct provisions.

In short, Vollgeld backers believe that a full money reserve system will lead to:

  1. Greater control of business cycle fluctuations.
  2. The complete elimination of bank runs.
  3. A significant reduction in net government debt.
  4. A dramatic reduction in private debt.

Opponents counter that an end to fractional reserve banking will crush the financial industry and its ability to facilitate economic growth. They contend that concentrating credit creation authority in the hands of bureaucrats — as Vollgeld does — is a mistake. Moreover, they believe that depositors under Vollgeld will likely earn negative returns on their deposits. Thus the initiative will discourage deposits altogether.

Because this story features many moving parts and opinions, I have curated a reading list to help you keep track of this potentially earth-shaking movement.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©Getty Images/Danita Delimont

Jason Voss, CFA

Jason Voss, CFA, tirelessly focuses on improving the ability of investors to better serve end clients. He is the author of the Foreword Reviews Business Book of the Year Finalist, The Intuitive Investor and the CEO of Active Investment Management (AIM) Consulting. Previously, he was a portfolio manager at Davis Selected Advisers, L.P., where he co-managed the Davis Appreciation and Income Fund to noteworthy returns. Voss holds a BA in economics and an MBA in finance and accounting from the University of Colorado.

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