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Switzerland to vote on a referendum to prevent SNB from selling Gold - SocGen

FXStreet (Bali) - Sebastien Galy, Senior FX Strategist at Societe Generale, reminds us of the upcoming Nov 30 Swiss referendum to prevent the SNB from selling Gold and forcing it to maintain 20% of its foreign reserves in Gold.

Key Quotes

"On 30 November Switzerland will vote on a referendum to prevent the SNB from selling Gold and forcing it to maintain 20% of its foreign reserves in Gold. The ban on selling Gold would go into effect immediately and the SNB would have five years to reach the 20% requirement."

"Over the five-year period, the SNB would have to sell part of its currency reserves (or theoretically print money) to finance the Gold purchases. Currently this amounts to selling USD68bn, mainly by selling EUR and USD, to buy 1,783 tons of Gold."

"If the referendum were voted into law, the SNB could bypass it by retaining the tranche of foreign reserves needed for liquidity management while splitting off the rest in a Sovereign Wealth Fund nominally under the control of the ministry of finance. This would leave the SWF outside the definition of foreign reserves in the referendum."

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