Is A Gold Swiss Franc In The Works?
August 10th, 2011I don’t agree with the part about credit being allowed on these accounts, but, wow!
Via: Forbes:
Now, in Switzerland, efforts are underway to create an official Gold Swiss franc (GSF) with a set of coins, each with a fixed content of gold. The proposed constitutional change would permit private institutions to issue an unlimited number of coins whose appearance, content and weight of gold, and definition would be under the supervision of the Swiss government.
For example, the smallest coin would have a face value of 1 GSF and have 0.1 grams of gold in its center, similar to today’s bi-metallic euro coins, and be worth—at today’s price of gold, about $4.00.
Five, 10, 20 and 50 GSF coins would have 0.5, 1.0, 2.0 and 5.0 grams of gold and today would be worth approximately $20, $40, $80 and $200 respectively. Gold Swiss franc bank notes are conceivable, as are GSF bank deposits, but they would have to be 100% backed by gold held by the issuing institution. Credit transactions would be legal, but fractional reserve credit would be forbidden under Swiss law.
You know, personally I don’t have a problem with the fractional reserve banking system. I do have a problem with legal tender laws that make us all accept bank notes as if they were equally good.
George Selgin has done a lot of work on free banking, and he says that the stablest banking system was in Scotland during Adam Smith’s time, and those people had basically no gold backing their notes. People just believed in the creditworthiness of the bank:
http://www.youtube.com/watch?v=5P7W1G1hbiQ