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The exact day it passes, the Swiss banking stocks would likely crash because their ability to be in control and pass the risk to the central bank (as the lender
by pimmen 8y ago
The exact day it passes, the Swiss banking stocks would likely crash because their ability to be in control and pass the risk to the central bank (as the lender of last resort) is a big portion of their value.
But, what happens in the long run to the Swiss markets? I would suspect it’s not good either, it mirrors how the money worked while on the gold standard too much for my taste in that rapid responses to recessions becomes much more complicated.
- icebraining 8y agoI don't see how it's similar to the gold standard; the central bank could still print money.
- OscarCunningham 8y agoYou're correct. And conversely as well; during the gold standard banks could still lend money from deposits.
- nickik 8y agoAbsolutely that is what 100% reserve people don't understand. The money supply under the gold standard was highly flexible. Banks depending on demand (or velocity) automatically raised or lowered their reserves. Meaning that if velocity is slow, banks would automatically lend more and create stable monetary conditions. Basically what central banks now do by having a bunch of burocrates look at statistics.
- pimmen 8y agoThe money derives its value from something central (wether it's the gold holdings of the country or the printing press) rather than being decentralized.
- nickik 8y agoNo they wouldn't because the law doesn't go into effect. The state would first have to debate how it would be implemented and they would not implement something insane. Eventually they would announce how it would work and the SNB would probably just copy the way it is doing now, with a different way of accounting.