Hello from Switzerland,

Thank you for covering up the subject. I may add just a few things to make it clear. As you may already know it, Vollgeld isn't technically the same as a 100% reserve system, but the aim of the initiative remain more or less the same: to prevent commercial banks to create money out of thin air. Actually banks could still create money as it's the case right now, they just couldn't call it swiss francs (CHF), but "UBS Swiss Francs" for instance. Only CHF would be protected by the law and it would be the swiss national bank task to evaluate how much money supply the economy would need. Each CHF bank account would be backed by the SNB, but they could at any time ask for a loan if they are short of liquidity as long as the request matches with the monetary policy of the SNB.

That's where the initiative is still unclear. We don't exactly know under which rule the money supply would be created. If you read carefully Vollgeld website, they say that the SNB would take indicators as GDP or growth as potential standard for rules of monetary creation. This reminds, of course, monetarist theories of Milton Friedman, just put a number a let the computer do the job.

In reality, I frankly don't know if swiss economic growth is strong enough to cover up all the government spending. It's true that Switzerland doesn't spend as much as most euro countries (approx 30% of GDP), but there's a huge gap between canton of Geneva and Zurich for instance. In fact, Geneva publics spending are more than twice bigger than ZH (Geneva is at almost 60%, in other words on France standard).

It's no secret that most of countries in the world live beyond their means, but until now, the debt system did absorb inflation. I really don't know if a system like the one proposed by Vollgeld could work. On the other hand, I really believe that fractional reserve landing system is coming to an end. In our reality potential growth is far too low to sustain our living standards and Governments sizes doesn't stop to increase everywhere, destroying a big part of the economy, in my opinion. If we continue like this, short terms results will be: higher unemployment, higher social welfare needs and a never ending higher public debt impossible to pay back. All of this, just to to ensure the stability of the currency? In the end, i'd rather try something like Vollgeld. At least, if we crash, everyone will sink, not only the taxpayers and because of this, maybe, the government will act more carefully.

In the end, the more I reflect on the subject, the more I really think that a free banking system (without any central currency) is the way to go to save our economies.

Best reagrds