A campaign to radical shift Switzerland’s financial industry into something resembling Bitcoin’s economic system lost spectacularly yesterday — but it did manage to win almost 500,000 votes, around 25% of those polled.
The controversial plan — known as the Sovereign Money Initiative — would have seen commercial banks barred from electronically creating money when they lend beyond their deposits.
This process is how most money in the world is created — not by central banks as many people think.
In the last decade Bitcoin and cryptocurrencies — underpinned by blockchain technology — have emerged as a technological alternative to the debt-based financial industry and have been met with a mixture of mockery, scorn and fear.
Berkshire Hathaway’s Warren Buffett and JP Morgan chief executive Jamie Dimon have both recently expressed their deep-seated scepticism of Bitcoin and cryptocurrencies.
The creation of Bitcoin in 2009 came alongside the global financial crisis and both the cryptocurrency movement and support for the Sovereign Money Initiative in Switzerland have grown in tandem.
Bitcoin’s creator, the mysterious Satoshi Nakamoto, included a reference to the UK’s chancellor potentially issuing a second bank bailout during the financial crisis in the first Bitcoin block mined.
There are limited number of Bitcoins that can be created, fixed at 21 million and the creation of them is regulated by the blockchain and the process known as Bitcoin mining.
“Cryptocurrency and the blockchain does look like where we’re heading. It could have been used under the system we were proposing,” said Emma Dawnay, board member of MoMo, the group which proposed the Sovereign Money Initiative.
“Blockchain technology could be how the Swiss government could try to bring debt free new money into the economy. Despite the vote losing the Swiss central bank is looking at similar things,” Dawnay added.
The Swiss central bank, much like other central banks around the world, has already begun looking into using blockchain to help keep track of its financial industry.
The Swiss National Bank president Thomas Jordan said earlier this year central bank money could potentially be issued via a distributed ledger.
However, Jordan was one of the Sovereign Money Initiative’s most prominent critics, saying the proposal was a “dangerous experiment.”
Meanwhile, the Swiss city of Zug is gearing up for a blockchain-powered trial municipal vote this summer, scheduled to take place between June 25 and July 1.
Zug’s so-called Crypto Valley, a global hub for cryptocurrency and blockchain development, in 2016 launched an initiative accepting Bitcoin as payment for certain municipality services.
Earlier this month the privately held Hypothekarbank Lenzburg bank became the first bank in Switzerland to provide business accounts to blockchain and cryptocurrency companies.
“The way money currently comes into circulation still isn’t well understood,” said Dawnay. “Before we can expect change we need to educate people about how money is created and the established institutions which benefit from it.”
MoMo — which is made up of academics, former bankers and scientists — will continue to try to push for financial reform.
Campaign spokesman Raffael Wuethrich said: “The discussion is only just getting started. Our goal is that money should be in the service of the people and not the other way around and we will continue to work on it.”