Swiss Conservatives Seek Ban on Central Bank Gold Sales

Members of the conservative Swiss People's Party (SVP) want a law to prevent the country's central bank -- currently struggling to tame a super-strong Swiss franc -- from selling its gold reserves, according to a proposal published on Tuesday.

The proposal, dubbed Save our Swiss Gold, would be put to a referendum if it won enough initial support.

It would not only ban the Swiss National Bank from selling its gold reserves, but would also force it to hold at least 20 percent of its assets in gold, the text published in an official register said.

Switzerland has sold no gold since August 2008, according to figures from the International Monetary Fund. At the end of 2010, the SNB's gold holdings were valued at 43.3 billion francs -- about 16 percent of its total assets of 274 billion Swiss francs (currently $310 billion).

Referendums are central to Switzerland's political system of direct democracy, and have been held on topics ranging from health insurance to smoking bans.

Interest in the SNB's balance sheet has intensified with the sharp appreciation of the franc, which has absorbed policymakers on and off since the 2008 financial crisis heightened the currency's attractions as a traditional safe haven.

The SNB's latest move was to announce a cap on the Swiss franc against the euro on Sep. 6, pledging unlimited currency interventions if needed, as the franc's strength threatened the competitiveness of Swiss exports and the tourist industry.

SVP leading light Christoph Blocher had previously called on Chairman Philipp Hildebrand to resign after the SNB ran up its biggest annual loss ever in 2010 because its euro holdings, accumulated during interventions in 2009-10, sank in value in Swiss franc terms.

The initiative states the SNB's gold would have to be stored in Switzerland.

Swiss newspaper Neue Zuercher Zeitung quoted the text of a speech by SVP parliamentarian Ulrich Schluer who said the Swiss public was being robbed of its wealth, with gold reserves a symbol of each person's hard work, inventive talent, pioneer spirit, motivation and economic power.

Schluer is backing the measure along with SVP members Luzi Stamm and Oskar Freysinger. In 2009 the party spearheaded a referendum in which voters approved a ban on building new minarets.

The initiators of the gold proposal will now have 18 months to collect the 100,000 signatures required to call a referendum.

Switzerland is a signatory of the third Central Bank Gold Agreement, which runs from Sept 2009 to Sept 2014. Under the agreement gold sales from signatory central banks will not exceed 2,000 tonnes, or 400 tonnes in any one year of the deal.